<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-8612
AMERITECH CORPORATION
(Incorporated under the laws of the State of Delaware)
30 S. Wacker Drive, Chicago, Illinois 60606
I.R.S. Employer Identification Number 36-3251481
Telephone Number - (800) 257-0902
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
---- ----
At April 30, 1997, 549,075,746 common shares were outstanding.
<PAGE>2
Part I - Financial Information
------------------------------
AMERITECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Millions, except per share amounts)
(Unaudited)
Three Months Ended
March 31
---------------
1997 1996
---- ----
Revenues
Local Service...................... $ 1,555 $ 1,465
Interstate network access.......... 620 579
Intrastate network access.......... 149 140
Long distance services............. 358 376
Cellular, directory and other...... 1,177 1,007
------- -------
3,859 3,567
------- -------
Operating expenses
Employee-related expenses.......... 990 936
Depreciation and amortization...... 611 574
Other operating expenses........... 1,191 1,091
Taxes other than income taxes...... 155 144
------- -------
2,947 2,745
------- -------
Operating income..................... 912 822
Interest expense..................... 125 124
Other income, net.................... 65 51
------- -------
Income before income taxes........... 852 749
Income taxes......................... 316 271
------- -------
Net income........................... $ 536 $ 478
======= =======
Earnings per common share............ $ 0.97 $ 0.86
------- -------
Dividends declared per common
share ........................... $ 0.565 $ 0.530
------- -------
Average common shares outstanding
(millions).......................... 550.5 554.8
------- -------
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE>3
AMERITECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
March 31, 1997 Dec. 31, 1996
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments........ $ 175 $ 145
Receivables, net........................... 2,976 3,070
Material and supplies...................... 200 231
Prepaid and other.......................... 329 353
------- -------
3,680 3,799
------- -------
Property, plant and equipment............... 32,589 32,292
Less, accumulated depreciation............. 19,145 18,785
------- -------
13,444 13,507
------- -------
Investments, primarily international........ 2,183 2,323
Other assets and deferred charges........... 4,128 4,078
------- -------
Total assets................................ $23,435 $23,707
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities
Debt maturing within one year.............. $ 2,739 $ 3,155
Accounts payable........................... 1,667 1,836
Other...................................... 2,121 1,841
------- -------
6,527 6,832
------- -------
Long-term debt.............................. 4,296 4,437
------- -------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes.......... 921 900
Unamortized investment tax credits......... 164 172
Postretirement benefits
other than pensions...................... 2,990 2,984
Other...................................... 667 695
------- -------
4,742 4,751
------- -------
Shareowners' equity
Common stock, par value $1;2.4 billion
shares authorized, 588,314,000 issued in 1997
and 588,113,000 issued in 1996......... 588 588
Proceeds in excess of par value............ 5,779 5,732
Reinvested earnings........................ 3,379 3,154
Treasury stock, at cost (37,465,000 shares
in 1997 and 38,182,000 shares in 1996)... (1,357) (1,344)
Deferred compensation...................... (190) (259)
Currency translation adjustment............ (332) (188)
Other, net................................. 3 4
------- -------
7,870 7,687
------- -------
Total liabilities and shareowners' equity... $23,435 $23,707
======= =======
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>4
AMERITECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31
-------------
1997 1996
---- ----
Cash Flows from Operating Activities
Net income................................... $ 536 $ 478
Adjustments to net income
Depreciation and amortization.............. 611 574
Deferred income taxes, net................. 12 (7)
Investment tax credits, net................ (8) (10)
Capitalized interest....................... (7) (7)
Change in accounts receivable, net......... 94 (5)
Change in material and supplies............ 21 (11)
Change in certain other current assets..... 24 13
Change in accounts payable................. (169) (359)
Change in certain other current
liabilities............................... 292 148
Change in certain other noncurrent
assets and liabilities................... (49) (41)
Other operating activities, net............ (43) 8
------- -------
Net cash from operating activities........... 1,314 781
------- -------
Cash Flows from Investing Activities
Capital expenditures......................... (539) (457)
Additional investments....................... (3) (877)
Proceeds from New Zealand Telecom
share repurchase......................... 21 --
Other investing activities, net.............. (9) 3
------- -------
Net cash from investing activities........... (530) (1,331)
------- -------
Cash Flows from Financing Activities
Net change in short-term debt................ (471) 863
Retirement of long-term debt................. (6) (10)
Dividend payments............................ (311) (294)
Proceeds from reissuance of treasury stock... 100 84
Repurchase of common stock................... (93) (101)
Other financing activities, net.............. 27 41
------- -------
Net cash from financing activities........... (754) 583
------- -------
Net increase (decrease) in cash and
temporary cash investments.................. 30 33
Cash and temporary cash investments,
beginning of period......................... 145 131
------- -------
Cash and temporary cash investments,
end of period............................... $ 175 $ 164
======= =======
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>5
AMERITECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1:Preparation of Interim Financial Statements
The condensed consolidated financial statements of Ameritech
Corporation (Ameritech or the Company) have been prepared in
accordance with the rules and regulations of the Securities and
Exchange Commission (SEC). These financial statements include
estimates and assumptions that affect the reported amounts of assets
and liabilities and the amounts of revenues and expenses. Actual
amounts could differ from those estimates. In the Company's opinion,
these statements include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair statement of results for
each period shown. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such SEC rules and regulations. The Company
believes that the disclosures made are adequate to make the
information presented not misleading. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's latest Annual Report on Form 10-K.
Note 2: Pending Acquisition
On April 8, 1997, Ameritech entered into a definitive agreement with
Sprint Corporation (Sprint) under which a subsidiary of the Company
will purchase the assets of Sprint's local exchange business in
Illinois (Central Telephone Company of Illinois or Centel) for
approximately $160 million. Under terms of the agreement, the
subsidiary will purchase Centel's telephone assets used to serve
approximately 136,000 residential and business customer access lines
in a small portion of Chicago and part or all of ten Chicago suburbs.
The transaction is expected to be concluded in 1997, pending regulatory
approval.
5
<PAGE>6
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 vs.
THREE MONTHS ENDED MARCH 31, 1996
RESULTS OF OPERATIONS
- ---------------------
For the three months ended March 31, 1997, net income was $536
million or $0.97 per share on 550.5 million average common shares
outstanding. This represented a 12.1 percent increase in net income
and a 12.8 percent increase in earnings per common share from the
comparable prior year period, for which net income was $478 million
or $0.86 per share on 554.8 million average common shares
outstanding.
- ---------------------------------------------------------------------
Revenues
- --------
Total revenues for the three months ended March 31, 1997 increased
8.2 percent over the comparable prior year period to $3,859 million.
The increase was primarily attributable to increases in the number of
cellular and paging subscribers, higher network usage volumes
resulting from access line growth and increased demand for dedicated
services and increased revenues from call management services, such
as Call Waiting, Call Forwarding and Caller ID. These increases were
partially offset by decreased revenues from long distance service and
equipment sales, as discussed below.
- ---------------------------------------------------------------------
Local service
- -------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $1,555 $1,465 $ 90 6.1
Local service revenues include basic monthly service fees and usage
charges, fees for call management services, installation and
connection charges and public phone revenues. The increase in local
service revenues for the three months ended March 31, 1997 was due
largely to higher network usage volumes, resulting primarily from
access line growth of 3.2 percent over the prior year period. Second
line additions by residential and small business customers
contributed to the increase in access lines, as demand for Internet
access and data transport capabilities continues to grow. Sales of
call management services, such as Call Forwarding, Call Waiting and
Caller ID also increased, fueled by customer demand for additional
flexibility and convenience.
There were 19,895,000 access lines in service as of March 31, 1997
compared with 19,275,000 as of March 31, 1996.
6
<PAGE>7
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Network access
- --------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Interstate
- ----------
Three Months Ended $ 620 $ 579 $ 41 7.1
Intrastate
- ----------
Three Months Ended $ 149 $ 140 $ 9 6.4
Network access revenues are fees charged to interexchange carriers
that use the Company's local landline communications network to
connect customers to their long distance network. In addition, end
users pay flat rate access fees to connect to the long distance
network. These revenues are generated from both interstate and
intrastate services.
The increase in interstate network access revenues for the three
months ended March 31, 1997 was due primarily to an increase in
network minutes of use, resulting from overall growth in the volume
of calls handled for interexchange carriers. Greater demand for
dedicated services by Internet service providers and other high-
capacity users also contributed to the increase. These revenue
increases were partially offset by rate reductions. Interstate
minutes of use for the three months ended March 31, 1997 increased by
4.9 percent over the comparable prior year period.
The increase in intrastate network access revenues for the three
months ended March 31, 1997 was due primarily to volume increases,
largely resulting from increased network usage by alternative
providers of intraLATA toll service in Illinois, Michigan and
Wisconsin. These volume increases were largely offset, however, by
decreases in revenue from intraLATA long distance service, as
discussed below. Rate decreases also partially offset the volume
increases. Intrastate minutes of use for the three months ended
March 31, 1997 increased by 15.1 percent over the comparable prior-
year period.
- ---------------------------------------------------------------------
Long distance service
- ---------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 358 $ 376 $ (18) (4.8)
Long distance service revenues are derived from customer calls to
locations outside of their local calling areas but within the same
Local Access and Transport Area (LATA).
The decrease in long distance service revenues for the three months
ended March 31, 1997 was primarily attributable to volume decreases
resulting from increased efforts on the part of other
telecommunications carriers, largely in Illinois, to bill their own
customers for local toll calling. Previously, these carriers had
allowed Ameritech to collect these revenues in exchange for the
payment of access charges to complete the calls on the carriers'
networks. As a result, this revenue decrease was substantially
offset by a corresponding decrease in access charge expenses
reflected in other operating expenses. Implementation of Dial 1+
capability in Illinois, Michigan and Wisconsin, which introduced
competition to the intraLATA toll markets, also contributed to the
volume decrease. These decreases were partially offset by net rate
increases.
7
<PAGE>8
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Cellular, directory and other
- -----------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $1,177 $1,007 $ 170 16.9
Cellular, directory and other revenues include revenues derived from
cellular communications, paging services, telephone directory
publishing, lease financing, billing and collection services,
telephone equipment sales and installation, and security monitoring
services.
The increase in cellular, directory and other revenues for the three
months ended March 31, 1997 was largely attributable to cellular
revenue growth resulting from a 32.6 percent increase in subscribers
from 2,043,000 as of March 31, 1996 to 2,709,000 as of March 31,
1997. Paging revenues also increased as a result of a 50.0 percent
increase in subscribers from 802,000 at March 31, 1996 to 1,203,000
as of March 31, 1997. Higher revenues from directory advertising,
security monitoring, lease financing services, cable TV and other
nonregulated services, such as inside wire installation and
maintenance and advanced data services, also contributed to the
increase.
- ---------------------------------------------------------------------
Operating expenses
- ------------------
Total operating expenses for the three months ended March 31, 1997
increased by $202 million or 7.4 percent from the prior year. The
increase was largely attributable to increased operating costs in
growth-related businesses, such as cellular and security monitoring
services, and to increases in employee-related expenses and other
operating expenses for emerging businesses, such as long distance,
personal communications service (PCS) and cable TV.
- ---------------------------------------------------------------------
Employee-related expenses
- -------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 990 $ 936 $ 54 5.8
The increase in employee-related expenses for the three months ended
March 31, 1997 was primarily attributable to higher wage rates at the
landline communications subsidiaries and increased employee levels at
emerging and growth-related businesses. This increase was partially
offset by lower overtime expenses and force levels at the landline
communications subsidiaries.
There were 66,403 employees as of March 31, 1997, compared with
65,502 as of March 31, 1996.
8
<PAGE>9
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Depreciation and
amortization
- ------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 611 $ 574 $ 37 6.4
The increase in depreciation and amortization expense for the three
months ended March 31, 1997 was primarily due to higher plant
balances, as well as higher depreciation rates on certain asset
categories due to the use of shorter depreciable lives for newer
technologies.
- ---------------------------------------------------------------------
Other operating expenses
- ------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $1,191 $1,091 $ 100 9.2
The increase in other operating expenses for the three months ended
March 31, 1997 was largely attributable to growth-related cost of
sales and customer increases at the cellular and security monitoring
operations, as well as higher costs in the emerging long distance and
cable TV businesses. Increased contract services costs for systems
development and data center management, as well as higher
uncollectibles and advertising expenses related to increased
marketing and sales efforts, also contributed to the increase.
- ---------------------------------------------------------------------
Taxes other than income taxes
- -----------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 155 $ 144 $ 11 7.6
Taxes other than income taxes consist of property taxes, gross
receipts taxes and other taxes not directly related to earnings. The
increase in taxes other than income taxes for the three months ended
March 31, 1997 was due primarily to increased use taxes in Michigan,
as well as increases in capital stock and gross receipts taxes,
resulting primarily from business growth.
9
<PAGE>10
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Other Income and Expenses
- -------------------------
Interest expense
- -----------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 125 $ 124 $ 1 0.8
The change in interest expense for the three months ended March 31,
1997 was not significant.
- ---------------------------------------------------------------------
Other income, net
- -----------------
Change
March 31 Income Percent
------------
(dollars in millions) 1997 1996 (Expense) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 65 $ 51 $ 14 27.5
Other income, net includes earnings related to Ameritech's
investments (when the equity method of accounting is followed),
interest income and other nonoperating items. The increase in other
income, net for the three months ended March 31, 1997 was due
primarily to increased equity earnings from international
investments, primarily Belgacom and Matav in Hungary. Ameritech's
investment in Belgacom (approximately 17.5 percent) was finalized in
late March 1996, and no equity earnings were recorded by Ameritech in
the first quarter of 1996. These increases were slowed by the
effects of a stronger U.S. dollar versus local foreign currencies, as
well as a decrease in interest income.
- ---------------------------------------------------------------------
Income taxes
- ------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 316 $ 271 $ 45 16.6
The increase in income tax expense for the three months ended March
31, 1997 was due primarily to an increase in pretax earnings, as
discussed above. The Company's effective tax rate increased slightly
over the comparable prior year period, largely due to a decrease in
the amortization of investment tax credits relative to pretax income.
10
<PAGE>11
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
FINANCIAL CONDITION AND OTHER MATTERS
- -------------------------------------
Capital expenditures
- --------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 533 $ 466 $ 67 14.4
The increase in capital expenditures for the three months ended March
31, 1997 related primarily to higher capital expenditures at the
landline communications subsidiaries and the cellular subsidiary to
accommodate growth.
- ---------------------------------------------------------------------
Dividends declared
- -------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 311 $ 294 $ 17 5.8
On March 19, 1997, the Board of Directors declared a quarterly
dividend of $0.565 per common share, a 6.6 percent increase over the
$0.53 per common share declared in the first quarter of the prior
year. The weighted average number of common shares outstanding
decreased to 550.5 million shares in the three months ended March 31,
1997 from 554.8 million shares in the comparable prior year period,
primarily as a result of the Company's stock buy-back program.
- ---------------------------------------------------------------------
Debt ratio
- ----------
The debt ratio was 47.2 percent as of March 31, 1997, compared with
49.7 percent as of December 31, 1996. The decrease is largely
attributable to a decrease in debt balances due primarily to an
improvement in cash flow from operations, combined with an increase
in equity due to higher cumulative earnings.
- ---------------------------------------------------------------------
Ratio of earnings to fixed charges
- ----------------------------------
The ratio of earnings to fixed charges for the three months ended
March 31 was 6.32 in 1997 and 5.72 in 1996.
11
<PAGE>12
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Other Matters
- -------------
Competition and the Telecommunications Act of 1996
- --------------------------------------------------
The Company's local service markets have been opened to competition
from interexchange carriers and other local service providers, as
required by the Telecommunications Act of 1996 (the 1996 Act).
Interconnection agreements that the Company has signed require it to
allow access to network elements at cost-based rates or services at
discounted, wholesale rates. These agreements may result in some
downward pressure on local service revenues, as a portion of the
Company's revenue shifts from local service at retail rates to
network access at wholesale rates.
The 1996 Act was also designed to bring renewed scrutiny of the
current universal service funding policy. Historically, network
access charges have been used to help local exchange carriers ensure
universal basic telephone service to all customers. The FCC is
expected to review and possibly modify this policy during 1997. Any
modifications by the FCC may result in changes to the Company's
revenue stream related to network access charges.
Ameritech expects to request permission to offer interLATA long
distance service in each of its five region states during 1997. For
each request, following review by the state commission the FCC will
have 90 days to determine whether Ameritech has met the provisions of
the 14-point competitive checklist and other statutory requirements
and whether the Company should be allowed to offer interLATA long
distance service. Although the timing of review and approval of
these requests is uncertain, the Company is fully prepared to provide
long distance service in its own region pending these regulatory
approvals. Notwithstanding the potential for an adverse effect on
certain revenue streams of the Company, Ameritech expects to capture
a major share of expected growth in the communications marketplace,
including interLATA long distance.
New Zealand Share Repurchase
- ----------------------------
In November 1996, Telecom Corporation of New Zealand Limited (New
Zealand Telecom) announced plans to repurchase in 1997 a portion of
its stock. Ameritech has a 24.8% ownership interest in New Zealand
Telecom. In order to continue to comply with the New Zealand
government's requirement that the Company and Bell Atlantic
Corporation, which also has a 24.8% interest, not own more than 49.9%
of New Zealand Telecom's stock, the Company is selling a pro rata
portion of its shares to New Zealand Telecom during 1997, resulting
in expected total cash proceeds to the Company of about $165 million
(based on the 1996 year-end exchange rate), while not materially
changing its percentage ownership in New Zealand Telecom. The
Company had received proceeds of approximately $21 million as of
March 31, 1997 and approximately $51 million as of April 30, 1997 as
a result of this repurchase program.
12
<PAGE>13
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Other Matters (cont'd)
- ----------------------
Belgacom Restructuring
- ----------------------
Belgacom has announced a restructuring plan including a proposal to
offer voluntary early retirement to about 6,500 employees. Employees
may sign up for the offer beginning May 5, 1997 and ending May 31, 1997.
Ameritech, when applying the equity method of accounting for
its share of Belgacom earnings, will reflect the deemed cost of this
restructuring in the quarter ending June 30, 1997. The magnitude of
the restructuring charge is dependent upon the number of employees
accepting the offer. Most of the financial incentives being offered
to employees will be funded by the Belgacom sponsored pension plan.
Effects of Foreign Currency Fluctuations
- ----------------------------------------
Ameritech's foreign operations and investments in international
ventures are subject to certain risks related to fluctuation in
foreign currency exchange rates. In the first quarter of 1997, a
strengthening U.S. dollar resulted in the Company recognizing some
foreign exchange transaction losses and currency translation
adjustments related to these investments. Foreign exchange
transaction losses incurred by wholly owned subsidiaries adversely
impacted operating income, while transaction losses incurred by other
international ventures (primarily equity method investments) had a
negative impact on other income, net. Translation adjustments
resulted in a decrease in the investment balance and a corresponding
reduction in shareowners' equity. It is impossible to determine the
impact that these currency fluctuations will have on future results
of operations or financial position. Foreign operations continue to
provide strong financial results and earnings growth.
New Accounting Pronouncements
- -----------------------------
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (FAS) No. 128,
"Earnings Per Share." This statement specifies the computation,
presentation and disclosure requirements for earnings per share
(EPS)previously found in Accounting Principles Board (APB) Opinion
No. 15. It replaces the presentation of primary EPS with a
presentation of basic EPS, and requires dual presentation of basic
and diluted EPS on the face of the income statement for all
entities with complex capital structures. The statement is
effective for financial statements issued for periods ending after
December 15, 1997, and early application is not permitted. The
Company does not expect adoption of this standard to have a
material effect on its financial statements, since dilutive
potential common shares historically have not resulted in material
EPS dilution.
13
<PAGE>14
AMERITECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (cont'd.)
Private Securities Litigation Reform Act Safe Harbor Statement
- --------------------------------------------------------------
Except for historical information contained herein, the above
discussion contains certain forward-looking statements that
involve potential risks and uncertainties. The Company's future
results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences
include, but are not limited to, changes in economic and market
conditions, effects of state and federal regulation, risks
inherent in international operations and the impact of new
technologies. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to revise or
update these forward-looking statements to reflect events or
circumstances that arise after the date hereof or to reflect the
occurrence of unanticipated events.
14
<PAGE>15
AMERITECH CORPORATION AND SUBSIDIARIES
Part II - Other Information
- ---------------------------
Item 4 Submission of Matters to a Vote of Security Holders.
- ------ ---------------------------------------------------
(a) The 1997 Annual Meeting of Shareowners was held on April 16,
1997.
The number of common shares present at the Annual Meeting in
person or by proxy and voting and withholding authority to vote
in the election of Directors was 462,455,012 or 83.95 percent
of the common shares of Ameritech outstanding on February 18,
1997, the record date for the Annual Meeting.
(b) The following nominees, having received the FOR votes set
opposite their respective names, constituting a plurality of
the votes cast at the Annual Meeting for the election of
Directors, were elected Directors of the Company to terms
expiring in 1998.
DIRECTORS FOR WITHHELD
--------- --- --------
Donald C. Clark 453,434,524 9,020,488
Melvin R. Goodes 454,138,994 8,316,018
James A. Henderson 453,989,468 8,465,544
John B. McCoy 454,151,021 8,303,991
Laura D'Andrea Tyson 450,486,048 11,968,964
The largest percentage of shares withheld from voting with
respect to any nominee for director was 2.588 percent. The
terms of office of the following Directors continued after the
meeting: Hanna Holborn Gray, Ph.D., Sheldon B. Lubar, Lynn M.
Martin, Arthur C. Martinez, Richard C. Notebaert, John D. Ong,
A. Barry Rand and James A. Unruh.
(c) Shareowners ratified the appointment of Arthur Andersen LLP, as
independent public accountants, to examine the consolidated
financial statements for the current year ending December 31,
1997. The vote was 455,062,549 shares FOR and 4,054,349 shares
AGAINST, with 3,338,114 shares abstaining.
(d) Shareowners approved the Ameritech Long-Term Stock Incentive
Plan. The vote was 350,298,404 shares FOR the proposal and
58,629,735 shares AGAINST, with 9,557,661 shares abstaining and
43,969,212 broker non-votes recorded.
(e) A proposal by a shareowner to provide for cumulative voting in
the election of directors was not approved. A total of
94,668,083 shares were voted FOR the proposal, 291,247,460
shares were voted AGAINST, 32,569,997 shares abstained and
broker nonvotes were recorded as to 43,969,472 shares.
15
<PAGE>16
Item 6 Exhibits and Reports on Form 8-K.
- ------ ---------------------------------
(a) Exhibits
--------
3b By-laws of the Company as amended on March 19, 1997.
11a Statement re: Computation of primary earnings per share
of the three months ended March 31, 1997 and 1996.
11b Statement re: Computation of fully diluted earnings per
share for the three months ended March 31, 1997 and
1996.
12 Computation of ratio of earnings to fixed charges for
the three months ended March 31, 1997 and March 31,
1996.
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K dated April 15, 1997 was filed
under Item 5, Other Events, to report Ameritech's earnings
for the first quarter of 1997.
16
<PAGE>17
SIGNATURES
Pursuant to the requirements 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
Date: May 6, 1997 By /s/ Barbara A. Klein
------------------------
Barbara A. Klein
Vice President and Comptroller
(Principal Accounting Officer)
17
11
BY-LAWS
of
AMERITECH CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office of the Corporation shall
be in the City of Wilmington, County of New Castle, State of
Delaware. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of
the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the
stockholders for the election of directors or for any other
purpose shall be held at such time and place, within or without
the State of Delaware, as shall be designated by the Board of
Directors. In the absence of any such designation by the Board
of Directors, each such meeting shall be held at the principal
office of the Corporation at two o'clock p.m.
Section 2. Annual Meeting. An annual meeting of stock
holders shall be held for the purpose of electing Directors and
transacting such other business as may properly be brought before
the meeting. The date of the annual meeting shall be determined
by the Board of Directors.
Section 3. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by law, may be called by the Chairman of the Board and
shall be called by the Chairman of the Board or the Secretary at
the direction of the Board of Directors or, at any time prior to
January 1, 1984, upon the written request of the holders of at
least 80% of all of the shares of stock of the Corporation then
entitled to vote in an election of Directors.
Section 4. Notice of Meetings. Written notice of each
meeting of the stockholders stating the place, date and time of
the meeting shall be given not less than ten nor more than sixty
days before the date of the meeting, to each stockholder entitled
to vote at such meeting. The notice of any special meeting of
stockholders shall state the purpose or purposes for which the
meeting is called.
Section 5. Quorum. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business,
except as otherwise provided by law. If a quorum is not present
or represented, the holders of the stock present in person or
represented by proxy at the meeting and entitled to vote thereat
shall have power, by the affirmative vote of the holders of a
majority of such stock, to adjourn the meeting to another time
and/or place, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 6. Voting. At all meetings of the stockholders,
each stockholder shall be entitled to vote, in person or by
proxy, the shares of voting stock owned by such stockholder of
record on the record date for the meeting. When a quorum is
present or represented at any meeting, the vote of the holders of
a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which, by express
provision of law or of the certificate of incorporation, a
different vote is required, in which case such express provision
shall govern and control the decision of such question.
ARTICLE III
Section 1. Place of Meetings. The Board of Directors may
hold meetings, both regular and special, either within or without
the State of Delaware.
Section 2. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such time and at such place as
shall from time to time be determined by the Board. No notice of
regular meetings need be given.
Section 3. Special Meetings. Special meetings of the Board
may be called by the Chairman of the Board. Special meetings
shall be called by the Chairman of the Board or the Secretary on
the written request of two Directors. Notice of each special
meeting shall be given to each Director by mail at least two
days, or by telephone, telegram or other personal notice at least
one day, prior to the meeting. Such notice need not specify the
purpose for which a meeting is called.
Section 4. Quorum. At all meetings of the Board a majority
of the total number of Directors shall constitute a quorum for
the transaction of business and the act of a majority of the
Directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by law. If a quorum shall not be present
at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present.
Section 5. Organization. The Chairman of the Board shall
act as chairman at all meetings of the Board of Directors. If
the Chairman of the Board is not present, the Vice Chairman (if
elected and if a member of the Board, and if more than one in the
order designated by the Board or in the absence of such
designation in the order of their election), or if no such Vice
Chairman is present the President (if elected and if a member of
the Board, and if more than one in the order designated by the
Board or in the absence of such designation in the order of their
election), or if no such President is present a Director chosen
by a majority of the Directors present, shall act as chairman at
meetings of the Board of Directors.
Section 6. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the whole Board, may
designate five or more Directors, including the Chairman of the
Board and the Vice Chairman (if elected and if a member of the
Board, and if more than one the first in order designated by the
Board of Directors or in the absence of such designation the
first in order of election), to constitute an Executive
Committee, to serve as such, unless the resolution designating
the Executive Committee is sooner amended or rescinded by the
Board of Directors, until their respective successors are
designated. The Board of Directors, by resolution adopted by a
majority of the whole Board, may also designate additional
Directors as alternate members of the Executive Committee to
serve as members of the Executive Committee in the place and
stead of any regular member or members thereof who may be unable
to attend a meeting or otherwise unavailable to act as a member
of the Executive Committee, provided that a Director who is also
an officer of the Corporation shall not serve as an alternate
member of the Executive Committee in the place and stead of a
Director who is not also an officer of the Corporation. In the
absence or disqualification of a member and all alternate members
who may serve in the place and stead of such member, the member
or members thereof present at any meeting and not disqualified
from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another Director to act at the
meeting in the place of any such absent or disqualified member,
provided that a Director who is also an officer of the
Corporation shall not be appointed to act at a meeting of the
Executive Committee in place of a Director who is not also an
officer of the Corporation.
Except as expressly limited by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation and
except for the power and authority to elect the Chairman of the
Board or a Vice Chairman or a President, the Executive Committee
shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs
of the Corporation between the meetings of the Board of
Directors. The Executive Committee shall keep a record of its
acts and proceedings, which shall form a part of the records of
the Corporation in the custody of the Secretary, and all actions
of the Executive Committee shall be reported to the Board of
Directors at the next meeting of the Board.
The Chairman of the Board shall be Chairman of the Executive
Committee and shall preside at meetings of the Executive
Committee. In the absence of the Chairman of the Board, a member
chosen by a majority of the members present at a meeting shall
preside at such meeting.
Meetings of the Executive Committee may be called at any
time by the Chairman of the Board, or any two of its members.
Notice of each meeting shall be given by mail at least two days,
or by telephone, telegram or other personal notice at least two
hours, prior to the meeting. Such notice need not specify the
purpose for which the meeting is called. A majority of the
members of the Executive Committee shall constitute a quorum for
the transaction of business and, except as expressly limited by
this Section, the act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the
Executive Committee. Except as expressly provided in this
Section, the Executive Committee shall fix its own rules of
procedure.
Section 7. Compensation Committee. The Board of Directors,
by resolution adopted by a majority of the whole Board, may
designate three or more Directors, none of whom shall also be an
officer of the Corporation, to constitute a Compensation
Committee, to serve as such, unless the resolution designating
the Compensation Committee is sooner amended or rescinded by the
Board of Directors, until their respective successors are
designated. The Board of Directors, by resolution adopted by a
majority of the whole Board, may also designate additional
Directors as alternate members of the Compensation Committee in
the place and stead of any regular member or members thereof who
may be unable to attend a meeting or otherwise unavailable to act
as a member of the Compensation Committee, provided that a
Director who is also an officer of the Corporation shall not
serve as an alternate member of the Compensation Committee. In
the absence or disqualification of a member and all alternate
members, the member or members thereof present at any meeting and
not disqualified from voting whether or not such member or
members constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of any such absent or
disqualified member, provided that a Director who is also an
officer of the Corporation shall not be appointed to act at a
meeting of the Compensation Committee.
The Compensation Committee shall have the power and
authority to review and act with respect to incentive
compensation plans, pension plans, stock options, savings plans,
insurance and other employee benefit plans, to approve the salary
and compensation of individuals at the level of Assistant Vice
President of the Corporation and to review and make
recommendations to the Board with respect to salary and
compensation of officers at the level of Vice President and above
of the Corporation. The Compensation Committee also shall have
such power and authority as may be conferred upon it under the
terms of the employee benefit plans of the Corporation or by
resolution of the Board of Directors.
The Compensation Committee shall keep a record of
proceedings and report the same to the Board of Directors to such
extent and in such form as the Board of Directors may require.
Unless otherwise provided in the resolutions designating the
Compensation Committee, a majority of the members thereof may
select its Chairman, fix its rules of procedure, fix the time and
place of its meetings and specify what notice of meetings, if
any, shall be given.
Section 8. Other Committees. The Board of Directors may
designate one or more other committees, each such committee to
consist of one or more Directors. Except as expressly limited by
the General Corporation Law of the State of Delaware or the
Certificate of Incorporation, any such committee shall have and
may exercise such powers as the Board of Directors may determine
and specify in the resolution designating such committee. The
Board of Directors also may designate one or more additional
Directors as alternate members of any such committee to replace
any absent or disqualified member at any meeting of the
committee, and at any time may change the membership of any
committee or amend or rescind the resolution designating the
committee. In the absence or disqualification of a member or
alternate member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may
unanimously appoint another Director to act at the meeting in the
place of any such absent or disqualified member, provided that
the Director so appointed meets any qualifications stated in the
resolution designating the committee, and provided further that a
Director who is also an officer of the Corporation shall not be
appointed to act a meeting in place of a Director who is not also
an officer the Corporation. Each committee shall keep a record
of proceedings and report the same to the Board of Directors to
such extent and in such form as the Board of Directors may
require. Unless otherwise provided in the resolution designating
a committee, a majority of all of the members of any such
committee may select its Chairman, fix its rules of procedure,
fix the time and place of its meetings and specify what notice of
meetings, if any, shall be given.
Section 9. Action without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these ByLaws,
any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as
the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board
or committee.
Section 10. Attendance by Telephone. Members of the Board
of Directors, or of any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors
or any committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and such
participation in a meeting shall constitute presence in person at
the meeting.
Section 11. Compensation. The Board of Directors shall
have the authority to fix the compensation of Directors, which
may include their expenses, if any, of attendance at each meeting
of the Board of Directors or of a committee.
ARTICLE IV
Section 1. Enumeration. The officers of the Corporation
shall be chosen by the Board of Directors and shall be a Chairman
of the Board, a Secretary, a Treasurer and a Comptroller. The
Board of Directors may also elect one or more Vice Chairmen, one
or more Presidents, one or more Vice Presidents (one or more of
whom may be Senior Vice Presidents or Executive Vice Presidents),
one or more Assistant Secretaries, Assistant Treasurers and
Assistant Comptrollers and such other officers and agents as it
shall deem appropriate. Any number of offices may be held by the
same position.
Section 2. Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors and shall
hold office until their successors are elected and qualified.
Any officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors. Any vacancy
occurring in any office of the Corporation required by this
Article shall be filled by the Board of Directors, and any
vacancy in any other office may be filled by the Board of
Directors.
Section 3. Chairman of the Board. The Chairman of the
Board shall be the Chief Executive Officer of the Corporation
and, as such, shall have general supervision, direction and
control of the business and affairs of the Corporation, subject
to the control of the Board of Directors, shall preside at
meetings of stockholders and shall have such other functions,
authority and duties as customarily appertain to the office of
the chief executive of a business corporation or as may be
prescribed by the Board of Directors.
Section 4. Vice Chairman. The Vice Chairman, under the
direction and control of the Chairman of the Board, shall perform
such duties and have such other powers as the Board of Directors
may from time to time prescribe. The Vice Chairman shall assist
the Chairman of the Board in the administration, general
management and direction of the business and affairs of the
Corporation. In the absence or disability of the Chairman of the
Board, the Vice Chairman (or in the event there be more than one
Vice Chairman, the Vice Chairmen in the order designated by the
Directors or, in the absence of such designation, in the order of
their election) shall have the powers and perform the duties of
the Chairman of the Board.
Section 5. President. The President shall have such
functions, authority and duties as may be prescribed by the Board
of Directors or the Chairman of the Board. The President may be
designated to have responsibility for a particular group of
entities or business of the Corporation. In the absence or
disability of the Vice Chairman, the President (or in the event
there be more than one President, the Presidents in the order
designated by the Directors or, in the absence of such
designation, in the order of their election) shall have the
duties of the Vice Chairman.
Section 6. Vice President. The Vice President shall
perform such duties and have such other powers as may from time
to time be prescribed by the Board of Directors, the Chairman of
the Board, the Vice Chairman or the President.
Section 7. Secretary. The Secretary shall keep a record of
all proceedings of the stockholders of the Corporation and of the
Board of Directors, and shall perform like duties for the
standing committees when required. The Secretary shall give, or
cause to be given, notice of all meetings of the stockholders and
shall perform such other duties as may be prescribed by the Board
of Directors, the Chairman of the Board, the Vice Chairman or the
President. The Secretary shall have custody of the corporate
seal of the Corporation and the Secretary, or in the absence of
the Secretary any Assistant Secretary, shall have authority to
affix the same to any instrument requiring it, and when so
affixed it may be attested by the signature of the Secretary or
an Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the
Corporation and to attest such affixing of the seal.
Section 8. Assistant Secretary. The Assistant Secretary,
or if there be more than one, the Assistant Secretaries in the
order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall,
in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and
exercise the powers of the Secretary and shall perform such other
duties as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board, the Vice Chairman, the
President or the Secretary.
Section 9. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of
the Corporation as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render
to the Chairman of the Board, the Vice Chairman, the President
and the Board of Directors, at its regular meetings or when the
Board of Directors so requires, an account of all transactions as
Treasurer and of the financial condition of the Corporation. The
Treasurer shall perform such other duties as may from time to
time be prescribed by the Board of Directors, the Chairman of the
Board, the Vice Chairman, the President or the Chief Financial
Officer.
Section 10. Assistant Treasurer. The Assistant Treasurer,
or if there shall be more than one, the Assistant Treasurers in
the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall,
in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and
exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as may from time to time be
prescribed by the Board of Directors, the Chairman of the Board,
the Vice Chairman, the President, the Chief Financial Officer or
the Treasurer.
Section 11. Comptroller. The Comptroller shall be the
principal accounting officer of the Corporation, shall be
responsible to the Board of Directors for the maintenance of
adequate accounting procedures and records and shall perform such
other duties as may from time to time be prescribed by the Board
of Directors, the Chairman of the Board, the Vice Chairman, the
President or the Chief Financial Officer.
Section 12. Assistant Comptroller. The Assistant
Comptroller, or if there shall be more than one, the Assistant
Comptrollers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their
election), shall, in the absence of the Comptroller or in the
event of the Comptroller's inability or refusal to act, perform
the duties and exercise the powers of the Comptroller and shall
perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors, the
Chairman of the Board, the Vice Chairman, the President, the
Chief Financial Officer or the Comptroller.
Section 13. Chief Financial Officer. The Board of
Directors may designate any elected officer of the Corporation as
the Chief Financial Officer of the Corporation.
Section 14. Other Officers. Any officer who is elected or
appointed from time to time by the Board of Directors and whose
duties are not specified in these By-Laws shall perform such
duties and have such powers as may be prescribed from time to
time by the Board of Directors, the Chairman of the Board, the
Vice Chairman or the President.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Certificates of stock in the Corporation
shall be signed by or in the name of the Corporation by the
Chairman of the Board or the Vice Chairman or the President or a
Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Corporation. The
signatures of the Chairman of the Board, the Vice Chairman, the
President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and the
transfer agent and registrar, may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, the certificate may be issued by the
Corporation with the same effect as if such officer, transfer
agent or registrar were such officer, transfer agent or registrar
at the date of its issue.
Section 2. Transfer. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction on
its books.
Section 3. Replacement. In the case of the loss,
destruction or theft of a certificate for any stock of the
Corporation, a new certificate may be issued upon satisfactory
proof of such loss, destruction or theft and upon such terms as
the Board of Directors may prescribe. The Board of Directors may
in its discretion require the owner of the lost, destroyed or
stolen certificate, or his legal representative, to give the
Corporation a bond, in such sum and in such form and with such
surety or sureties as it may direct, to indemnify the Corporation
against any claim that may be made against it with respect to a
certificate alleged to have been lost, destroyed or stolen.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason
of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
Section 2. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. To the extent that a director, officer, employee
or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Sections 1 and 2 of this article, or in defense of any
claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of
this article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in Sections 1
and 2 of this article. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 5. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action,
suit or proceeding as authorized by the Board of Directors in the
manner provided in Section 4 of this article upon receipt of an
undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the
Corporation under this article.
Section 6. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, (i)
arising under the Employee Retirement Income Security Act of 1974
or regulations promulgated thereunder, or under any other law or
regulation of the United States or any agency or instrumentality
thereof or law or regulation of any state or political
sub-division or any agency or instrumentality of either, or under
the common law of any of the foregoing, against expenses
(including attorneys' fees), judgments, fines, penalties, taxes
and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding by
reason of the fact that he is or was a fiduciary, disqualified
person or party in interest with respect to an employee benefit
plan covering employees of the Corporation or of a subsidiary
corporation, or is or was serving in any other capacity with
respect to such plan, or has or had any obligations or duties
with respect to such plan by reason of such laws or regulations,
provided that such person was or is a director, officer, employee
or agent of the Corporation, or (ii) in connection with any
matter arising under federal, state or local revenue or taxation
laws or regulations, against expenses (including attorneys'
fees), judgments, fines, penalties, taxes, amounts paid in
settlement and amounts paid as penalties or fines necessary to
contest the imposition of such penalties or fines, actually and
reasonably incurred by him in connection with such action, suit
or proceeding by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise and had responsibility for or
participated in activities relating to compliance with such
revenue or taxation laws and regulations; provided, however, that
such person did not act dishonestly or in willful or reckless
violation of the provisions of the law or regulation under which
such suit or proceeding arises. Unless the Board of Directors
determines that under the circumstances then existing, it is
probable that such director, officer, employee or agent will not
be entitled to be indemnified by the Corporation under this
Section, expenses incurred in defending such suit or proceeding,
including the amount of any penalties or fines necessary to be
paid to contest the imposition of such penalties or fines, shall
be paid by the Corporation in advance of the final disposition of
such suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such
amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under this Section.
Section 7. The indemnification provided by this article
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not he would be entitled to
indemnity against such liability under the provisions of this
article.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 2. Corporate Seal. The corporate seal shall be in
such form as may be approved from time to time by the Board of
Directors. The seal may be used by causing it or a facsimile
thereof to be imposed or affixed or in any other manner
reproduced.
Section 3. Waiver of Notice. Whenever any notice is
required to be given under law or the provisions of the
Certificate of Incorporation or these By-Laws, a waiver thereof
in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent to notice.
ARTICLE VIII
AMENDMENTS
These By-Laws may be altered, amended or repealed or new
By-Laws may be adopted by the Board of Directors. The fact that
the power to amend, alter, repeal or adopt the By-Laws has been
conferred upon the Board of Directors shall not divest the
stockholders of the same powers.
ARTICLE IX
EMERGENCY PROVISIONS
During any emergency resulting from an attack on the United
States or on a locality in which the Company conducts its
business or customarily holds meetings of its Board of Directors
or its stockholders, or during any nuclear or atomic disaster, or
during the existence of any catastrophe, or other similar
emergency condition, as a result of which a quorum of the Board
of Directors cannot readily be convened for action (an
OEmergencyO), the following emergency procedures shall apply:
(a) A meeting of the Board of Directors may be called by
any director or officer of the Company. Notice of such meeting
may be given only to such directors as it is feasible to reach at
the time and by means as may be feasible at the time, but in any
event not less than two hours prior to such meeting. The
presence of at least three directors at such meeting shall
constitute a quorum and shall be sufficient for the transaction
of business at such meeting, except that if there are fewer than
three surviving directors the surviving director or directors,
although less than a quorum, may determine the number of
directors (which shall be not less than three) and may fill
vacancies on the Board of Directors. In filling such vacancies,
consideration shall be given to senior officers of the Company in
the order of the lines of succession (if any) established in
accordance with paragraph (b) below.
(b) The Chairman of the Board, with the approval of the
Board of Directors or a committee of the Board of Directors
authorized by resolution of the Board to confer such approval,
either before or during an Emergency, may provide, and from time
to time modify, lines of succession as to officers of the Company
(subject and in addition to the succession provided in these By-
Laws) in the event that during an Emergency any or all of the
officers or agents of the Company shall for any reason be
rendered incapable of discharging their duties.
(c) The Board of Directors, either before or during an
Emergency, may, effective in the Emergency, change the head
office or designate several alternative head offices or regional
offices, or authorize the officers to do so.
(d) No officer, director or employee of the Company or any
of its subsidiaries acting in accordance with this Article shall
be liable except for willful misconduct.
EXHIBIT 11a
AMERITECH CORPORATION
COMPUTATION OF PRIMARY EARNINGS PER SHARE
Three Months Ended
March 31
-------------
1997 1996
---- ----
Net income $536,138,000 $478,345,000
============ ============
Weighted average number of
shares outstanding 550,526,956 554,751,737
Additional dilutive effect of
outstanding options (as determined
by the application of the treasury
stock method) 2,567,760 3,034,266
------------ ------------
Weighted average shares outstanding
on which primary earnings per share
are based 553,094,716 557,786,003
============ ============
Primary earnings per share $0.97 $0.86
============ ============
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.
Amounts for the prior year have been restated to reflect inclusion of the
windfall tax benefit when applying the treasury stock method to determine
the dilutive effect of outstanding options.
EXHIBIT 11b
AMERITECH CORPORATION
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
Three Months Ended
March 31
-------------
1997 1996
---- ----
Net income $536,138,000 $478,345,000
============ ============
Weighted average number of
shares outstanding 550,526,956 554,751,737
Additional dilutive effect of
outstanding options (as determined
by the application of the treasury
stock method) 2,611,404 3,034,266
------------ ------------
Weighted average shares outstanding
on which fully diluted earnings
per share are based 553,138,360 557,786,003
============ ============
Fully diluted earnings per share $0.97 $0.86
============ ============
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.
Amounts for the prior year have been restated to reflect inclusion of the
windfall tax benefit when applying the treasury stock method to determine
the dilutive effect of outstanding options.
EXHIBIT 12
AMERITECH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Three Months Ended
March 31
--------------
1997 1996
---- ----
EARNINGS
- --------
Income before interest, income taxes
and undistributed equity earnings.......... $ 934 $ 854
Portion of rent expense
representing interest...................... 17 21
Michigan Single Business tax................ 7 9
Preferred dividends of subsidiary (2)....... 3 3
------ ------
Total earnings (1)......................... $ 961 $ 887
------ ------
FIXED CHARGES
- -------------
Interest expense............................ $ 125 $ 124
Capitalized interest........................ 7 7
Portion of rent expense representing
interest expense........................... 17 21
Preferred dividends of subsidiary........... 3 3
------ ------
Total fixed charges......................... $ 152 $ 155
------ ------
Ratio of earnings to fixed charges.......... 6.32 5.72
====== ======
(1) Earnings represent income before income taxes and fixed charges.
Since the Michigan Single Business Tax (the Tax) and rental
expense have been deducted to arrive at income before interest and
income taxes, the Tax and the one-third portion of rental expense
considered to be fixed charges are added back.
(2) For purposes of the above computation, the preferred stock
dividend requirement of a subsidiary has been increased to an
amount representing the pretax earnings which would be required to
cover the dividend requirements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
AMERITECH CORPORATION'S MARCH 31, 1997 CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 175,000
<SECURITIES> 0<F1>
<RECEIVABLES> 3,290,000
<ALLOWANCES> (314,000)
<INVENTORY> 200,000
<CURRENT-ASSETS> 3,680,000
<PP&E> 32,589,000
<DEPRECIATION> 19,145,000
<TOTAL-ASSETS> 23,435,000
<CURRENT-LIABILITIES> 6,527,000
<BONDS> 4,296,000
0
0
<COMMON> 588,000
<OTHER-SE> 7,282,000
<TOTAL-LIABILITY-AND-EQUITY> 23,435,000
<SALES> 0<F2>
<TOTAL-REVENUES> 3,859,000
<CGS> 0<F3>
<TOTAL-COSTS> 2,947,000
<OTHER-EXPENSES> (65,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125,000
<INCOME-PRETAX> 852,000
<INCOME-TAX> 316,000
<INCOME-CONTINUING> 536,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 536,000
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.97
<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 THE 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>
