<PAGE> COVER
U. S. Securities And Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 14, 1998
Commission File Number 1-8612
Ameritech Corporation
a Delaware Corporation
30 South Wacker Drive
Chicago, Illinois 60606
I.R.S. Employer Identification Number 36-3251481
Telephone number (800)257-0902
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Item 7. Financial Statements and Exhibits
Ameritech today reported record first-quarter revenues and its 18th
consecutive quarter of double-digit profit growth before one-time items. Major
growth drivers for the quarter were strong volume and customer gains across
Ameritech's U.S. operations combined with expanded contributions from the
company's extensive European investments.
Revenues climbed 7.1% to a first-quarter record of $4.13 billion, up from
$3.86 billion in the first quarter of 1997. First-quarter earnings per share
on a diluted basis grew 10.4% to 53 cents, up from 48 cents a year ago, and
basic earnings per share increased 10.2% to 54 cents, up from 49 cents a year
ago, both before one-time items. Net income advanced 10.1% to $590 million
before one-time items, up from $536 million in the first quarter of 1997.
Ameritech's first-quarter growth was highlighted by:
o 21% growth in sales of call management services such as Caller ID, call
waiting and voice messaging.
o 4.3% annual increase in access lines to 20.8 million-including a 12.7%
increase in additional lines and a 63% increase in ISDN lines.
o 23.5% annual growth in cellular customers to 3.3 million. Ameritech added
636,000 cellular customers over the past 12 months.
Ameritech's significant investments in international businesses
contributed one-fourth of the company's earnings growth in the quarter. With
major strategic investments in Belgium, Denmark and Hungary, Ameritech is the
largest foreign investor in European telecommunications, with a portfolio
valued at $7.5 billion.
In January, Ameritech completed its $3.1 billion investment for an
eventual 42% equity stake in Tele Danmark (NYSE: TLD), the national
communications company in Denmark. Since announcement of Ameritech's investment
in Tele Danmark on October 27, 1997, Tele Danmark's stock price has increased
more than 70%.
In April, Ameritech completed the sale of its 24.95% stake in Telecom
Corporation of New Zealand Limited (NYSE: NZT) through a global offering. Total
proceeds are expected to be $2.1 billion. As a result of the sale, Ameritech
expects to record a one-time gain in the second quarter of 1998.
In March, Ameritech outlined plans to reduce cumulative operating
expenses over the next five years by $3 billion. In the first quarter,
Ameritech recorded a one-time after-tax charge of $64 million for
restructuring costs, which are part of that cost containment program. Results
for the quarter also included a previously reported one-time after-tax non-
cash accounting charge of $34 million for currency-related fair value
adjustments related to Ameritech's investment in Tele Danmark. Including
these charges, reported first quarter earnings per share were 44 cents on a
diluted basis, 45 cents basic, and net income was $492 million.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three Months Ended
March 31 %
1998(1) 1997(1) Change
(Unaudited) (Unaudited)
Revenues $4,133 $3,859 7.1%
Operating expenses (2) 3,228 2,947 9.5%
Operating income 905 912 (0.8)%
Other income, net (3) 51 65 (21.5)%
Interest expense 175 125 40.0%
Income before income taxes 781 852 (8.3)%
Income taxes 289 316 (8.5)%
Net income $ 492 $ 536 (8.2)%
Average common shares
outstanding (000) 1,099,650 1,101,054 (0.1)%
Dilutive potential
common shares (000) 8,968 4,703 n/m
Average shares with dilution (000) 1,108,618 1,105,757 0.3 %
Basic earnings per common share $0.45 $0.49 (8.2)%
Diluted earnings per common share $0.44 $0.48 (8.3)%
Dividends declared per
common share $0.30 $0.2825 6.2%
n/m - not meaningful
(1) Income before one-time items rose 10.1 percent to $590 million
from $536 million in the first quarter of 1997. Diluted
earnings per share before one-time items grew 10.4 percent to
$0.53 per share, up from $0.48 per share in the first quarter of
1997. See notes (2) and (3) for details of the one-time items
reflected in 1998.
(2) Results for the first quarter of 1998 include a pretax charge of
$104 million ($64 million after-tax, or $0.06 per share) for a
restructuring charge related to the recently announced $3
billion cost containment program.
(3) Results for the first quarter of 1998 also include a pretax
charge of $54 million ($34 million after-tax, or $0.03 per
share) for a currency-related fair-value adjustment in
conjunction with our January 1998 investment in Tele Danmark.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
Change
from
March 31 Dec. 31 Dec. 31
1998 1997 1997
ASSETS (Unaudited)
Current assets $ 3,966 $ 4,549 $ (583)
Property, plant and equipment 13,900 13,873 27
Investments, primarily international 4,741 1,751 2,990
Other assets and deferred charges 5,346 5,166 180
Total assets $27,953 $25,339 $ 2,614
LIABILITIES AND SHAREOWNERS' EQUITY
Debt maturing within one year $ 2,893 $ 3,036 $ (143)
Other current liabilities 4,393 4,205 188
Long-term debt 7,019 4,610 2,409
Deferred credits and
other long-term liabilities 5,121 5,180 (59)
Shareowners' equity 8,527 8,308 219
Total liabilities and
shareowners' equity $27,953 $25,339 $ 2,614
SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
(Dollars in millions)
March 31, March 31, %
1998 1997 Change
Debt ratio 53.8% 47.2% 13.9%
Customer lines (000's) 20,751 19,895 4.3%
Employees 72,944 66,403 9.8%
Telephone company employees 51,393 50,015 2.8%
Customer lines per telephone
company employee 404 398 1.5%
Return on average
equity - annualized 26.3% 27.3% (3.7)%
Return on average total
capital - annualized 15.6% 16.9% (7.7)%
Construction activity $ 663 $ 533 24.4%
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SIGNATURE
Under the requirements of the Securities and Exchange Act of 1934, an
authorized company official has signed this report on our behalf.
Dated: April 14, 1998
Ameritech Corporation
By: /s/ Bruce B. Howat
Secretary
