<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, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6781
THE OHIO BELL TELEPHONE COMPANY
(Incorporated under the laws of the State of Ohio)
45 Erieview Plaza, Cleveland, Ohio 44114
I.R.S. Employer Identification Number 34-0436390
Telephone Number - (216) 822-9700
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF AMERITECH CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q
AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT
TO GENERAL INSTRUCTION H(2).
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 28, 1995, one common share was outstanding.
<PAGE>
<PAGE>2
PART I - FINANCIAL INFORMATION
The following condensed financial statements have been prepared by The Ohio
Bell Telephone Company (the Company) pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC) and, in the opinion of the
Company, 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.
CONDENSED STATEMENTS OF INCOME AND REINVESTED EARNINGS (DEFICIT)
(Millions of Dollars)
(Unaudited)
Three Months Ended
March 31
1995 1994
Revenues. . . . . . . . . . . . . . . . . $ 535.0 $537.4
------- ------
Operating Expenses
Employee-related expenses . . . . . . . 116.8 119.7
Depreciation and amortization . . . . . 88.2 95.8
Other operating expenses. . . . . . . . 160.9 143.8
Restructuring (credit) charge . . . . . (37.4) 132.5
Taxes other than income taxes . . . . . 55.7 57.6
------- ------
384.2 549.4
------- ------
Operating income (loss) . . . . . . . . . 150.8 (12.0)
Interest expense. . . . . . . . . . . . . 14.4 14.4
Other income, net . . . . . . . . . . . . (0.6) (2.5)
------- ------
Income (loss) before income taxes . . . . 137.0 (23.9)
Income taxes. . . . . . . . . . . . . . . 46.4 (6.7)
------- ------
Net income (loss) . . . . . . . . . . . . 90.6 (17.2)
Reinvested earnings (deficit),
beginning of period. . . . . . . . . . . (242.0) 236.8
Less, dividends . . . . . . . . . . . . 45.7 66.4
------- ------
Reinvested earnings (deficit),
end of period. . . . . . . . . . . . . . $(197.1) $153.2
======= ======
See Notes to Condensed Financial Statements.
<PAGE>
<PAGE>3
CONDENSED BALANCE SHEETS
(Dollars in Millions)
March 31, 1995 Dec. 31, 1994
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments. . . . . . $ 106.6 $ 60.5
Receivables, net
Customers . . . . . . . . . . . . . . . . . . 310.2 350.1
Ameritech and affiliates. . . . . . . . . . . 24.7 25.6
Other . . . . . . . . . . . . . . . . . . . . 18.8 17.3
Material and supplies. . . . . . . . . . . . . 7.5 3.3
Prepaid and other. . . . . . . . . . . . . . . 49.9 82.2
-------- --------
517.7 539.0
-------- --------
Property, plant and equipment . . . . . . . . . 5,615.4 5,572.5
Less, accumulated depreciation. . . . . . . . . 3,292.9 3,213.8
-------- --------
2,322.5 2,358.7
-------- --------
Investments, principally in affiliates. . . . . 58.6 65.8
Other assets and deferred charges . . . . . . . 155.1 88.0
-------- --------
Total assets. . . . . . . . . . . . . . . . . . $3,053.9 $3,051.5
======== ========
See Notes to Condensed Financial Statements.
<PAGE>
<PAGE>4
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
March 31, 1995 Dec. 31, 1994
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year. . . . . . . . . $ -- $ 0.4
Accounts payable
Ameritech Services, Inc. (ASI). . . . . . . . 108.2 126.2
Ameritech and affiliates. . . . . . . . . . . 26.6 38.3
Other . . . . . . . . . . . . . . . . . . . . 130.5 167.3
Other current liabilities. . . . . . . . . . . 351.4 355.9
-------- --------
616.7 688.1
-------- --------
Long-term debt. . . . . . . . . . . . . . . . . 834.9 834.9
-------- --------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes. . . . . . . 93.8 77.2
Unamortized investment tax credits . . . . . . 49.7 51.9
Postretirement benefits other than pensions. . 549.7 547.2
Long-term payable to ASI . . . . . . . . . . . 17.4 18.5
Other. . . . . . . . . . . . . . . . . . . . . 78.7 65.6
-------- --------
789.3 760.4
-------- --------
Shareowner's equity
Common stock (one share issued
and outstanding without par value). . . . . . 1,010.1 1,010.1
Reinvested deficit . . . . . . . . . . . . . . (197.1) (242.0)
-------- --------
813.0 768.1
-------- --------
Total liabilities and shareowner's equity . . . $3,053.9 $3,051.5
======== ========
See Notes to Condensed Financial Statements.
<PAGE>
<PAGE>5
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . $ 90.6 $(17.2)
Adjustments to net income (loss):
Restructuring (credit) charge, net of tax . . (24.3) 86.1
Depreciation and amortization . . . . . . . . 88.2 95.8
Deferred income taxes, net. . . . . . . . . . (2.0) (10.1)
Investment tax credits, net . . . . . . . . . (2.2) (2.7)
Interest during construction. . . . . . . . . (0.8) (0.9)
Provision for uncollectibles. . . . . . . . . 3.9 4.5
Change in accounts receivable . . . . . . . . 35.4 (5.8)
Change in material and supplies . . . . . . . (4.2) 0.6
Change in certain other current assets. . . . 4.0 3.4
Change in accounts payable. . . . . . . . . . (66.5) (22.5)
Change in certain other current liabilities . (7.7) 5.6
Change in certain other noncurrent
assets and liabilities . . . . . . . . . . . 3.7 (0.6)
Other . . . . . . . . . . . . . . . . . . . . 7.0 (3.8)
------ ------
Net cash from operating activities. . . . . . . 125.1 132.4
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures. . . . . . . . . . . . . . (51.3) (60.7)
Proceeds from disposals of property,
plant and equipment. . . . . . . . . . . . . . 0.1 2.9
------ ------
Net cash from investing activities. . . . . . . (51.2) (57.8)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net . . . . . . . . . . -- (8.8)
Retirements of long-term debt . . . . . . . . . (0.2) (0.1)
Dividend payments . . . . . . . . . . . . . . . (27.6) (65.7)
------ ------
Net cash from financing activities. . . . . . . (27.8) (74.6)
------ ------
Net increase in cash and
temporary cash investments . . . . . . . . . . 46.1 --
Cash and temporary cash investments at
beginning of period. . . . . . . . . . . . . . 60.5 --
------ ------
Cash and temporary cash investments at
end of period. . . . . . . . . . . . . . . . . $106.6 $ --
====== ======
See Notes to Condensed Financial Statements.
<PAGE>
<PAGE>6
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
MARCH 31, 1995
NOTE 1: Work Force Restructuring
During March 1994, the Company's parent, Ameritech Corporation, announced
its plan to reduce its existing nonmanagement work force. Approximately
11,500 employees are expected to leave under this program, including 2,801
employees of the Company. Under terms of agreements between Ameritech, the
Communications Workers of America (CWA) and the International Brotherhood
of Electrical Workers (IBEW), Ameritech implemented an enhancement to the
Ameritech Pension Plan by adding three years to both the age and the net
credited service of eligible nonmanagement employees who leave the business
during a designated period that ends in mid-1995. In addition, certain
business units are offering financial incentives under terms of the current
contracts with the CWA and IBEW to selected nonmanagement employees who
leave the business before the end of 1995. See additional discussion in
Management's Discussion and Analysis below.
As a result of the restructuring, a pretax charge of $132.5, or $86.1
after-tax, was recorded in the first quarter 1994. In the first quarter
1995, a gain of $37.4, or $24.3 after-tax, was recorded resulting primarily
from settlement gains from lump-sum pension payments from the Ameritech
pension plan to former employees. The cumulative gross program costs
through March 31, 1995 totaled $283.1, partially offset by settlement gains
of $147.3 for an aggregate pretax net program cost of $135.8, or $88.3
after-tax. At March 31, 1995, the remaining severance accrual was $19.9.
As of March 31, 1995, 2,159 employees have left the Company as a result of
the restructuring, with 642 expected to leave later in 1995.
NOTE 2: Discontinuation of FAS 71 and Reclassifications
As discussed more fully in the 1994 Annual Report on Form 10-K, during the
fourth quarter of 1994, the Company incurred an extraordinary noncash
after-tax charge of $445.2 as a result of its decision to discontinue the
application of Statement of Financial Accounting Standards No. 71 (FAS 71),
"Accounting for the Effects of Certain Types of Regulation."
The principal component of the above charge related to a determination that
telephone plant asset lives were too long and analog switches were
obsolete. The net effect of this determination is causing 1995
depreciation expense to decrease. Long-term, depreciation expense will
increase as the effects of shorter lives on plant assets and future plant
additions offset the discontinuation of depreciation of analog switches.
The following is a summary of average lives of property, plant and
equipment after the discontinuation of FAS 71:
<PAGE>
<PAGE>7
Asset Category Average Life
Central office equipment
Digital switching. . . . . . . . . . . . . . . . 7
Analog switching . . . . . . . . . . . . . . . . obsolete
Circuit accounts . . . . . . . . . . . . . . . . 7
Copper and fiber cable and wire facilities . . . . 15
All other. . . . . . . . . . . . . . . . . . . . . various
Certain additional financial statement impacts occur as a result of no
longer following FAS 71, including the provision for uncollectibles,
previously shown as a reduction in other revenues, has been reclassified to
other operating expenses.
<PAGE>
<PAGE>8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(Dollars in Millions)
The following is a discussion and analysis of the changes in revenues,
operating expenses and other income and expenses for the first three months
of 1995 as compared to the first three months of 1994:
Results of Operations
Revenues
Total revenues in the first three months of 1995 were $535.0 and were
$537.4 for the same period in 1994. The following paragraphs explain the
components of that change.
Local service
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $298.9 $294.8 $4.1 1.4
The increase in local service revenues in the first quarter 1995 was
primarily attributable to higher network volumes, resulting principally
from growth in the number of access lines, which increased 3.6 percent to
3,650,648 as of March 31, 1995, as well as increased volumes and greater
sales of special calling features, such as Call Forwarding and Caller ID.
These increases were partially offset by rate reductions of $9.5 resulting
from regulatory proceedings which adopted price regulation in place of
rate-of-return regulation and removed limits on intrastate earnings.
<PAGE>
<PAGE>9
Network access
March 31 Increase Percent
1995 1994 (Decrease) Change
Interstate
Three Months Ended $112.3 $109.9 $ 2.4 2.2
Intrastate
Three Months Ended $ 31.8 $ 35.5 $(3.7) (10.4)
The increase in interstate network access revenues for the three months
ended March 31, 1995 was primarily due to higher network usage, which
resulted in additional revenues of $4.2 and a reduction in NECA common line
pool support payments of $2.5. Partially offsetting these increases were
net rate reductions of $4.8. Minutes of use related to interstate calls
increased 6.2 percent in 1995. See additional discussion below regarding
Ameritech's interstate access price cap filing.
The decrease in intrastate network access revenues for the three months
ended March 31, 1995 was primarily due to rate reductions of $3.5, $0.8 of
which resulted from regulatory proceedings which adopted certain regulatory
freedoms as previously discussed. Higher network usage resulted in
additional revenues of $1.5 which partially offset these decreases.
Intrastate network access revenues also decreased as a result of a change
in certain billing arrangements with independent telephone companies.
Minutes of use related to intrastate calls increased 6.5 percent in 1995.
___________________________________________________________________________
Long distance service
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $42.1 $47.2 $(5.1) (10.8)
The decrease in long distance service revenues for the three months ended
March 31, 1995 was due to a decrease in intrastate network usage. Toll
messages decreased 4.4 percent in the three months ended March 31, 1995 as
compared with the prior year period.
<PAGE>
<PAGE>10
Other
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $49.9 $50.0 $(0.1) (0.2)
Other revenues include revenues derived from directory advertising, billing
and collection services, inside wire installation and maintenance services
and other miscellaneous services. The small decrease in other revenues was
primarily due to decreased revenues from billing and collection services of
$1.4. Also contributing to the decrease was a decrease in rent revenues of
$0.8 from a change in methodology in the way the Company accounts for these
revenues. In 1995, these revenues were reflected as credits to expense,
whereas in 1994, such amounts were included in other revenues. Offsetting
the decreases was an increase in inside wire installation and maintenance
revenues of $1.2 resulting from volume increases of $0.8 and rate increases
of $0.4. Other nonregulated revenues increased $0.7 primarily due to
increased voice mail volumes.
___________________________________________________________________________
Operating expenses
Total operating expenses for the three months ended March 31, 1995
decreased by $165.2 or 30.1 percent to $384.2. The decrease was almost
entirely attributable to the 1994 work force restructuring, which resulted
in a credit of $37.4 in the first quarter of 1995 related to the net
settlement gains previously discussed compared with a first quarter 1994
charge of $132.5.
___________________________________________________________________________
Employee-related expenses
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $116.8 $119.7 $(2.9) (2.4)
The decrease in employee-related expenses for the three months ended
March 31, 1995 was attributable primarily to the effect of work force
reductions over the past year of $12.8, as well as reduced bonus accruals
and other benefits of $5.6. Partially offsetting these decreases were the
effects of increased overtime payments and medical, dental and
postretirement benefits of $15.5.
There were 8,484 employees at March 31, 1995, compared with 9,960 at
March 31, 1994.
<PAGE>
<PAGE>11
Depreciation and
amortization expense
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $88.2 $95.8 $(7.6) (7.9)
The decrease in depreciation and amortization expense for the three months
ended March 31, 1995 was primarily due to the cessation of depreciation of
analog switches determined to be obsolete in connection with the
discontinuance of Statement of Financial Accounting Standards No. 71 (FAS
71), "Accounting for the Effects of Certain Types of Regulation," in the
fourth quarter of 1994. This decrease was partially offset by the change
in depreciation rates as a result of shortening telephone plant lives
following the discontinuation of FAS 71.
___________________________________________________________________________
Other operating expenses
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $160.9 $143.8 $17.1 11.9
The increase in other operating expenses for the three months ended
March 31, 1995 was primarily attributable to higher affiliate services
expenses of $23.8, resulting from increased billings from Ameritech
Services, Inc. (ASI) as business unit expenses, especially contract and
professional services have shifted to that entity, as well as increased
advertising expenses of $6.1, resulting from increased marketing efforts.
These increases were partially offset by a net decrease of $11.4 in
expenses for contract services, discussed above, bad debt expense and other
one-time adjustments.
<PAGE>
<PAGE>12
Restructuring (credit) charge
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $(37.4) $132.5 $(169.9) n/a
As discussed in Note 1, Ameritech announced in March 1994 that it intended
to reduce its nonmanagement work force by 6,000 employees (1,500 at the
Company) by the end of 1995. Reduction of the work force results from
Company's implementation of technological improvements, consolidations and
initiatives to balance its cost structure with emerging competition.
Ameritech now expects its nonmanagement work force to be reduced by about
11,500 employees through 1995 instead of the 6,000 originally estimated in
March, including 2,801 at the Company. A pretax charge of $132.5 related
to the original estimated work force reduction was recorded in the first
quarter of 1994, with additional charges later in 1994. A net noncash
settlement gain of $37.4 was recorded in the first quarter of 1995
associated with lump-sum pension payments to former employees. Future
settlement gains (estimated at $21.0) are anticipated.
Actual employee reductions by quarter were: 365 in the second quarter of
1994, 358 in the third quarter of 1994, 1,362 in the fourth quarter of 1994
and 74 in the first quarter of 1995. Estimates for the remainder of 1995
are 156 in the second quarter and 486 in the third quarter. Cash
requirements to fund the financial incentives (principally contractual
termination payments totaling approximately $80.6) are being met as
prescribed by applicable collective bargaining agreements. Certain of
these collective bargaining agreements require contractual termination
payments to be paid in a manner other than lump-sum, thus requiring cash
payments beyond an employee's termination date.
This program will reduce annual employee-related costs by approximately $50
thousand per departing employee. The projected savings may be partially
offset by the hiring of new employees with better matched skills to
accommodate growth, ensure high quality customer service and meet staffing
requirements for new business opportunities.
___________________________________________________________________________
Taxes other than income taxes
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $55.7 $57.6 $(1.9) (3.3)
The decrease in taxes other than income taxes for the three months ended
March 31, 1995 is primarily attributable to lower sales and use taxes of
$1.4 resulting from a change in the method of assessing these taxes, as
well as a decrease in property taxes.
<PAGE>
<PAGE>13
Other Income and Expenses
Interest expense
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $14.4 $14.4 $-- --
Interest expense remained constant for the three months ended March 31,
1995 as compared with the prior year. Lower short-term interest of $0.3 on
borrowings from the Ameritech short-term funding pool resulted from lower
average debt balances, partially offset by higher short-term interest
rates. Also offsetting the decrease were increased costs related to the
corporate-owned life insurance program.
___________________________________________________________________________
Other income, net
March 31 (Increase) Percent
1995 1994 Decrease Change
Three Months Ended $(0.6) $(2.5) 1.9 n/a
Other income, net includes equity earnings in affiliates, interest income
and other nonoperating items. The change in other income, net results
primarily from decreased equity earnings from ASI.
___________________________________________________________________________
Income taxes
March 31 Increase Percent
1995 1994 (Decrease) Change
Three Months Ended $46.4 $(6.7) $53.1 n/a
The increase in income taxes for the three months ended March 31, 1995 was
due primarily to the change in pretax income as a result of the work force
restructuring credit of $37.4 ($24.3 after-tax) in the first quarter of
1995 as compared to the work force restructuring charge of $132.5 ($86.1
after-tax) in the first quarter of 1994. Excluding these items, income
taxes changed in line with the earnings in the business.
<PAGE>
<PAGE>14
Interstate Access Price Cap Filing
On May 9, 1995 in its annual interstate access price cap filing, Ameritech
elected the 5.3 productivity factor with no earnings sharing as allowed
under the new price cap rules of the Federal Communications Commission
(FCC). That selection, together with other index changes required by the
FCC's rules, results in annual rate reductions to the Company's customers
totaling approximately $12.8 effective August 1, 1995.
Ameritech filed a waiver request with the FCC to make an additional
downward adjustment of its indices that would have the effect of applying
the 5.3 productivity factor retroactively back to January 1, 1995. The
result would be an additional annual rate reduction for the Company's
customers of $5.1 effective August 1, 1995. In return, Ameritech would be
relieved of all sharing obligations for the entire 1995 calendar year.
<PAGE>
<PAGE>15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K
No Form 8-K was filed by the registrant during the quarter for
which this report is filed.
<PAGE>
<PAGE>16
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.
THE OHIO BELL TELEPHONE COMPANY
(Registrant)
Date: May 9, 1995 /s/ Richard A. Kuzmar
Richard A. Kuzmar
Vice President and Comptroller
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE OHIO BELL TELEPHONE COMPANY'S MARCH 31, 1995 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 106,600
<SECURITIES> 0<F1>
<RECEIVABLES> 376,000
<ALLOWANCES> 22,300
<INVENTORY> 7,500
<CURRENT-ASSETS> 517,700
<PP&E> 5,615,400
<DEPRECIATION> 3,292,900
<TOTAL-ASSETS> 3,053,900
<CURRENT-LIABILITIES> 616,700
<BONDS> 834,900
<COMMON> 1,010,100
0
0
<OTHER-SE> (197,100)
<TOTAL-LIABILITY-AND-EQUITY> 3,053,900
<SALES> 0<F2>
<TOTAL-REVENUES> 535,000
<CGS> 0<F3>
<TOTAL-COSTS> 384,200
<OTHER-EXPENSES> (600)
<LOSS-PROVISION> 3,900
<INTEREST-EXPENSE> 14,400
<INCOME-PRETAX> 137,000
<INCOME-TAX> 46,400
<INCOME-CONTINUING> 90,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,600
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
<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 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>
