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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):
July 15, 1997
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
Ameritech (NYSE: AIT) today reported its 15th consecutive
quarter of double-digit earnings growth before one-time items-the
longest sustained double-digit growth record among major U.S.
communications companies.
Second-quarter 1997 earnings per share increased 10.8% to
$1.13 per share before a one-time charge for Ameritech's share of
a workforce restructuring charge at one of its overseas
investments. This compares with earnings of $1.02 per share in
the second quarter of 1996. Profits grew 10.1% before the one-
time item, to a record $624 million, up from $567 million in the
second quarter of 1996. Revenues were the highest of any quarter
in Ameritech's history-$3.99 billion, up 6.5% from the second
quarter of 1996. Including the one-time charge of $87 million or
16 cents a share, Ameritech's reported second-quarter earnings
were $537 million or 97 cents per share.
Ameritech's customer growth was strong. The company added
148,000 cellular customers in the quarter and 344,000 customers
over the six-month period-the largest second-quarter and first-
half gains in the company's history. Ameritech also added 122,000
security monitoring customers in the second quarter.
Ameritech's growth at the end of the second-quarter included:
o 31% annual growth in cellular customers to 2.9 million.
o 38% annual increase in paging customers to 1.3 million.
o 22% annual growth in sales of call management services
such as Caller ID, call waiting and voice messaging.
o 3.3% annual increase in access lines to 20 million.
o 8.6% annual growth in network access minutes of use.
o 42% annual increase in security monitoring customers to
566,000.
Also during the second quarter, Ameritech continued its
aggressive push to enter the $9 billion long distance business in
its five-state local phone market. Ameritech has opened its local
markets to competition faster than any other company in the
country, and urges an end to the red tape and delays that are
stalling development of more competition in long distance markets.
Ameritech applied to the FCC for approval to provide long distance
in Michigan on May 21 and supported that filing with extensive
supporting data on July 7. The FCC's ruling on Michigan is
expected by August 19. Ameritech plans to file for long distance
entry in additional states in the near future.
Ameritech also advanced its growth through further expansion
of its cable TV and security monitoring businesses. It has added
13 new cable TV franchises this year and now has 42 franchises
covering more than 2 million population. The company now offers
its enhanced cable TV service in 26 communities, and 3 out of every
10 cable TV families have already signed up for Ameritech's service
where it's marketed. Ameritech also acquired additional security
monitoring assets during the first half, in both Canada and the
United States. SecurityLink from Ameritech is the second largest
company in the $13 billion North American security monitoring
market.
For the first six months of 1997, Ameritech earnings before
the one-time charge rose 11.0% to $1,160 million, compared with
$1,045 million in the first half a year ago. First-half earnings
per share before the charge grew 11.6% to $2.11 compared with
$1.89 a year ago. Revenues increased to $7.84 billion from $7.31
billion in the first half of 1996. Including the one-time charge,
first-half reported net income was $1,073 million or $1.95 per
share.
At the end of the second quarter, Ameritech's cumulative
total return to investors since its stock began trading on
November 21, 1983 was 1,198%-ranking number one among major U.S.
communications companies. Total return equals stock price
appreciation plus reinvested dividends. The total return for the
S&P 500 over the same period was 730%. The average for the United
States' large local communications companies and the big three
long distance companies was 728%.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three Months Ended
June 30
Percent
1997 (1) 1996(1) Change
(Unaudited) (Unaudited)
Revenues $3,986 $3,744 6.5%
Operating expenses 2,945 2,798 5.3%
Operating income 1,041 946 10.0%
Other (income) expense, net
Belgacom restructuring (2) 87 -- n/a
Recurring other income (73) (73) --
Total other, net 14 (73) n/a
Interest expense 123 128 (3.9)%
Income before income taxes 904 891 1.5%
Income taxes 367 324 13.3%
Net income $ 537 $ 567 (5.3)%
Average common shares
Outstanding (000) 549,974 553,173 (0.6)%
Earnings per common share $0.97 $1.02 (4.9)%
Dividends declared per
common share $0.565 $0.530 6.6%
(1) Income before the one-time charge in 1997 rose 10.1 percent to
$624 million from $567 million in the second quarter of 1996.
Earnings per share before the one-time charge grew 10.8 percent
to $1.13 per share, up from $1.02 per share in the second
quarter of 1996. See note (2) for details of the one-time item
reflected in 1997.
(2) Results for the three months ended June 30, 1997, include a
one-time after-tax charge of $87 million or $0.16 cents a share
related to Ameritech's share of the costs associated with a
restructuring at Belgacom, the national communications company
for Belgium. In May 1997, Belgacom offered certain of its
27,000 work force financial incentives to voluntarily leave the
business by the end of 1998. About 6,300 employees accepted the
offer. Ameritech is 17.5% owner and strategic partner in
Belgacom.
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CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Six Months Ended
June 30 Percent
1997 (1) 1996 (1) Change
(Unaudited) (Unaudited)
Revenues $7,845 $7,311 7.3%
Operating expenses 5,892 5,543 6.3%
Operating income 1,953 1,768 10.5%
Other (income) expense, net
Belgacom restructuring (2) 87 -- n/a
Recurring other income (138) (124) 11.3%
Total other, net (51) (124) (58.9)%
Interest expense 248 252 (1.6)%
Income before income taxes 1,756 1,640 7.1%
Income taxes 683 595 14.8%
Net income $1,073 $1,045 2.7%
Average common shares
outstanding (000) 550,249 553,962 (0.7)%
Earnings per common share $1.95 $1.89 3.2%
Dividends declared per
common share $1.13 $1.06 6.6%
(1) Income before the one-time charge in 1997 rose 11.0 percent to
$1,160 million from $1,045 million in the first half of 1996.
Earnings per share before the one-time charge grew 11.6 percent
to $2.11 per share, up from $1.89 per share in the first half of
1996. See note (2) for details of the one-time item reflected
in 1997.
(2) Results for the six months ended June 30, 1997, include a
one-time after-tax charge of $87 million or $0.16 cents a share
related to Ameritech's share of the costs associated with a
restructuring at Belgacom, the national communications company
for Belgium. In May 1997, Belgacom offered certain of its
27,000 work force financial incentives to voluntarily leave the
business by the end of 1998. About 6,300 employees accepted the
offer. Ameritech is 17.5% owner and strategic partner in
Belgacom.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
Change
from
June 30 Dec. 31 Dec. 31
1997 1996 1996
ASSETS (Unaudited)
Current assets $ 3,887 $ 3,799 $ 88
Property, plant and equipment 13,502 13,507 (5)
Investments, primarily international 1,976 2,323 (347)
Other assets and deferred charges 4,396 4,078 318
Total assets $23,761 $23,707 54
LIABILITIES AND SHAREOWNERS' EQUITY
Debt maturing within one year $ 2,857 $ 3,155 $ (298)
Other current liabilities 3,767 3,677 90
Long-term debt 4,065 4,437 (372)
Deferred credits and
other long-term liabilities 5,047 4,751 296
Shareowners' equity 8,025 7,687 338
Total liabilities and
shareowners' equity $23,761 $23,707 $ 54
SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
(Dollars in millions)
June 30 June 30 %
1997 1996 Change
Debt ratio 46.3% 51.2% (9.6)%
Customer lines (000's) 20,041 19,399 3.3%
Employees 67,764 66,913 1.3%
Telephone company employees 50,901 52,101 (2.3)%
Customer lines per telephone
company employee 394 372 5.9%
Return on average
equity - adjusted
for one-time item Qtr. 31.0% 30.8% 0.6%
YTD 28.6% 28.5% 0.4%
Return on average total
capital - adjusted
for one-time item Qtr. 19.0% 17.9% 6.1%
YTD 17.6% 17.0% 3.5%
Construction activity Qtr. $644 $556 15.8%
YTD $1,177 $1,022 15.2%
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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: July 15, 1997
AMERITECH CORPORATION
By /s/ Bruce B. Howat
Bruce B. Howat
Secretary
