FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended September 30, 1994
or
__ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-2346
SOUTHWESTERN BELL TELEPHONE COMPANY
Incorporated under the laws of the State of Missouri
I.R.S. Employer Identification Number 43-0529710
One Bell Center, St. Louis, Missouri 63101-3099
Telephone Number: (314) 235-9800
THE REGISTRANT, A WHOLLY-OWNED SUBSIDIARY OF SOUTHWESTERN BELL
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
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating Revenues
Local service $ 1,012.4 $ 989.2 $ 2,995.1 $ 2,902.2
Network access 707.7 688.0 2,094.9 1,988.3
Long-distance service 238.9 252.3 685.9 730.4
Other 142.0 131.1 426.5 399.4
Total operating revenues 2,101.0 2,060.6 6,202.4 6,020.3
Operating Expenses
Cost of services and products 692.9 652.0 1,992.1 1,870.2
Selling, general and administrative 485.1 558.4 1,425.9 1,508.9
Depreciation and amortization 422.2 421.3 1,266.1 1,254.1
Total operating expenses 1,600.2 1,631.7 4,684.1 4,633.2
Operating Income 500.8 428.9 1,518.3 1,387.1
Other Income (Expense)
Interest expense (86.0) (96.3) (261.6) (297.4)
Other expense - net (7.4) (1.1) (18.6) (17.0)
Total other income (expense) (93.4) (97.4) (280.2) (314.4)
Income Before Income Taxes,
Extraordinary Loss and Cumulative Effect
of Changes in Accounting Principles 407.4 331.5 1,238.1 1,072.7
Income Taxes
Federal 114.3 73.5 359.6 266.4
State and local 14.6 5.7 45.4 32.1
Total income taxes 128.9 79.2 405.0 298.5
Income Before Extraordinary Loss
and Cumulative Effect of Changes
in Accounting Principles 278.5 252.3 833.1 774.2
Extraordinary Loss on Early Extinguishment
of Debt, net of tax -- (20.2) -- (153.2)
Cumulative Effect of Changes in Accounting
Principles, net of tax -- -- -- (1,849.4)
Net Income (Loss) $ 278.5 $ 232.1 $ 833.1 $(1,228.4)
See Notes to Financial Statements.
</TABLE>
<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
BALANCE SHEETS
Dollars in millions
<CAPTION>
September 30, December 31,
1994 1993
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 16.2 $ 37.8
Accounts receivable - net of allowances for
uncollectibles of $22.4 and $14.2 1,470.0 1,375.0
Material and supplies 137.7 129.0
Deferred charges 53.7 46.8
Deferred income taxes 168.8 152.4
Prepaid expenses and other current assets 152.4 56.6
Total current assets 1,998.8 1,797.6
Property, Plant and Equipment - at cost 26,727.3 26,231.3
Less: Accumulated depreciation and amortization 11,081.6 10,532.2
Property, Plant and Equipment - Net 15,645.7 15,699.1
Other Assets 319.8 401.7
Total Assets $ 17,964.3 $ 17,898.4
Liabilities and Shareowner's Equity
Current Liabilities
Debt maturing within one year $ 891.5 $ 663.0
Accounts payable and accrued liabilities 2,381.8 2,160.0
Total current liabilities 3,273.3 2,823.0
Long-Term Debt 4,267.5 4,383.0
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 1,781.2 1,746.7
Postemployment benefit obligation 2,610.6 2,817.7
Unamortized investment tax credits 384.1 429.8
Other noncurrent liabilities 308.1 356.7
Total deferred credits and other noncurrent liabilities 5,084.0 5,350.9
Shareowner's Equity
Common stock - one share, no par value 1.0 1.0
Paid-in surplus 5,317.8 5,706.9
Retained earnings (deficit) 20.7 (366.4)
Total shareowner's equity 5,339.5 5,341.5
Total Liabilities and Shareowner's Equity $ 17,964.3 $ 17,898.4
See Notes to Financial Statements.
</TABLE>
<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)
<CAPTION>
Nine months ended
September 30,
1994 1993
<S> <C> <C>
Operating Activities
Net income (loss) $ 833.1 $ (1,228.4)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,266.1 1,254.1
Provision for uncollectible accounts 58.4 45.3
Amortization of investment tax credits (45.7) (48.8)
Pensions and other postemployment expenses 232.1 196.7
Deferred income tax expense (31.7) (31.6)
Extraordinary loss, net of tax - 153.2
Cumulative effect of accounting changes, net of tax - 1,849.4
Other - net (449.2) (528.6)
Total adjustments 1,030.0 2,889.7
Net Cash Provided by Operating Activities 1,863.1 1,661.3
Investing Activities
Construction and capital expenditures (1,162.4) (1,284.1)
Net Cash Used in Investing Activities (1,162.4) (1,284.1)
Financing Activities
Net change in short-term borrowings with original
maturities of three months or less 375.7 22.1
Issuance of other short-term borrowings 35.5 11.0
Repayment of other short-term borrowings (12.5) (126.6)
Issuance of long-term debt 0.7 1,901.3
Repayment of long-term debt (286.7) (8.4)
Early extinguishment of debt and related call premiums - (1,563.2)
Dividends paid (835.0) (625.2)
Net Cash Used in Financing Activities (722.3) (389.0)
Net decrease in cash and cash equivalents (21.6) (11.8)
Cash and cash equivalents beginning of year 37.8 44.9
Cash and Cash Equivalents End of Period $ 16.2 $ 33.1
Cash Paid During the Nine Months Ended September 30 for:
Interest $ 264.1 $ 300.2
Income taxes $ 572.4 $ 324.1
See Notes to Financial Statements.
</TABLE>
<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF SHAREOWNER'S EQUITY
Dollars in millions
(Unaudited)
<CAPTION>
Retained
Common Paid-in Earnings
Stock Surplus (Deficit)
<S> <C> <C> <C>
Balance, December 31, 1992 $ 6,469.9 $ - $ 621.2
Net income (loss) - - (1,228.4)
Dividend to shareowner - (621.7) -
Transfer of equity (6,468.9) 6,468.9 -
Balance, September 30, 1993 $ 1.0 $ 5,847.2 $ (607.2)
Balance, December 31, 1993 $ 1.0 $ 5,706.9 $ (366.4)
Net income - - 833.1
Dividend to shareowner - (389.1) (446.0)
Balance, September 30, 1994 $ 1.0 $ 5,317.8 $ 20.7
See Notes to Financial Statements.
</TABLE>
* * * *
SELECTED FINANCIAL AND OPERATING DATA
At September 30, or for the nine months then ended: 1994 1993
Return on weighted average total capital* . . . . 13.34% 12.69%
Debt ratio . . . . . . . . . . . . . . . . . . . 49.14% 50.97%
Network access lines in service (000) . . . . . 13,598 13,157
Access minutes of use (000,000) # . . . . . . . . 35,859 32,796
Long-distance messages billed (000) . . . . . . . 773,075 762,376
Number of employees . . . . . . . . . . . . . . 48,790 50,010
* 1993 calculated using Income Before Extraordinary Loss and Cumulative
Effect of Changes in Accounting Principles.
# 1993 amounts have been restated to conform to the current
year's classifications.
SOUTHWESTERN BELL TELEPHONE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
PREPARATION OF INTERIM FINANCIAL STATEMENTS - Southwestern Bell
Telephone Company (Telephone Company) is a wholly-owned subsidiary of
Southwestern Bell Corporation (SBC). The financial statements have
been prepared by the Telephone Company pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and, in
the opinion of management, include all adjustments (consisting only of
normal recurring accruals and adjustments necessary for adoption of
new accounting standards) necessary to present fairly the results for
the interim periods 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.
Management believes that the disclosures made are adequate to make the
information presented not misleading. The results for the interim
periods are not necessarily indicative of results for the full year.
The financial statements contained herein should be read in
conjunction with the financial statements and notes thereto included
in the Telephone Company's 1993 Annual Report on Form 10-K.
SOUTHWESTERN BELL TELEPHONE COMPANY
Item 2. Management's Discussion and Analysis of Results of Operations
Dollars in millions
RESULTS OF OPERATIONS
Southwestern Bell Telephone Company (Telephone Company) reported net
income of $278.5 for the third quarter of 1994 and $833.1 for the
first nine months of 1994. Financial results for the third quarter
and first nine months of 1994 and 1993 are summarized as follows:
Third Quarter Nine-Month Period
% Change %
1994 1993 1994 1993 Change
Operating $ 2,101.0 $ 2,060.6 2.0 % $ 6,202.4 $ 6,020.3 3.0%
revenues
Operating $ 1,600.2 $ 1,631.7 (1.9)% $ 4,684.1 $ 4,633.2 1.1%
expenses
Income before
extraordinary
loss and $ 278.5 $ 252.3 10.4 % $ 833.1 $ 774.2 7.6%
accounting
changes
Extraordinary - $ (20.2) - - $ (153.2) -
loss
Accounting - - - - $ (1,849.4) -
changes
Net income $ 278.5 $ 232.1 20.0 % $ 833.1 $ (1,228.4) -
(loss)
The primary factor contributing to the increase in income before
extraordinary loss and cumulative effect of changes in accounting
principles during the third quarter and first nine months of 1994 was
growth in demand for services and products. This increase was
partially offset by rate reductions and increased fees for switching
system software licenses. Comparisons are also favorably impacted by
the recording of one-time charges relating to restructuring of
operations in the third quarter of 1993.
Results for the third quarter and first nine months of 1993 reflect
extraordinary losses of $20.2 and $153.2, respectively, associated
with refinancing of long-term debt. In addition, effective January 1,
1993, the Telephone Company adopted new financial accounting standards
relating to postretirement benefits, postemployment benefits and
income taxes resulting in a one-time, non-cash charge to 1993 earnings
of $1,849.4.
The Telephone Company's operating revenues in the third quarter and
first nine months of 1994 increased $40.4, or 2.0 percent, and $182.1,
or 3.0 percent, over the third quarter and first nine months of 1993,
respectively. Components of operating revenues for the third quarter
and first nine months of 1994 and 1993 are as follows:
Third Quarter Nine-Month Period
% Change %
1994 1993 1994 1993 Change
Local service $ 1,012.4 $ 989.2 2.3% $ 2,995.1 $ 2,902.2 3.2%
Network access
Interstate 475.4 454.5 4.6 1,391.2 1,331.8 4.5
Intrastate 232.3 233.5 (0.5) 703.7 656.5 7.2
Long-distance 238.9 252.3 (5.3) 685.9 730.4 (6.1)
service
Other 142.0 131.1 8.3 426.5 399.4 6.8
Total $ 2,101.0 $ 2,060.6 2.0% $ 6,202.4 $ 6,020.3 3.0%
Local service revenues increased in the third quarter and first
nine months of 1994 due primarily to increases in demand,
including 3.4 percent growth in the number of access lines since
September 30, 1993. This increase was partially offset by the
impact of previously ordered rate reductions in Texas and
accruals for rate reductions in Missouri.
Interstate network access revenues increased in the third quarter
and first nine months of 1994 due primarily to an increase in
demand for access services and growth in end user charges
attributable to an increasing access line base. For the nine-
month period, increases were partially offset by the impact of
higher accruals for revenue sharing under the Federal
Communications Commission (FCC) price cap plan, as well as a
retroactive billing adjustment in the second quarter of 1994 that
decreased interstate revenues while increasing intrastate
revenues.
Intrastate network access revenues were flat in the third quarter
of 1994 compared to 1993 as the impact of previously ordered rate
reductions in Texas and accruals for rate reductions in Missouri
offset increases related to demand and the 1994 partial
replacement of the Texas pool settlement process with a system of
primary toll carrier charges. Under this system, charges paid to
the Telephone Company by other intrastate carriers are recorded
as access revenues, while those paid by the Telephone Company are
recorded as cost of services and products. These amounts are
offsetting and did not materially affect operating income in the
third quarter and first nine months of 1994. Previously, only
the net settlement pool payment or receipt was recorded in
revenue. Intrastate network access revenues for the first nine
months of 1994 were higher, as demand and the Texas primary toll
carrier charges exceeded rate reductions. Year to date revenues
also increased as a result of the retroactive billing adjustment
noted in the preceding paragraph.
Long-distance service revenues decreased in the third quarter and
first nine months of 1994 due to decreases in demand compared to
1993, accruals for rate reductions, primarily in Missouri, and
reclassification of certain revenues to access revenues. Demand
in 1993 was unusually high due to flood-related activity.
Other operating revenues consist of the Telephone Company's non-
regulated network services and products, billing and collection
services performed for interexchange carriers, the provision for
uncollectible revenues related to all revenue classifications and
other miscellaneous revenues. Other operating revenues increased
in the third quarter and first nine months of 1994 due to
increases in demand for non-regulated services and products,
including Caller ID equipment, offset by decreases in
miscellaneous revenues.
The Telephone Company's operating expenses decreased $31.5, or 1.9
percent, in the third quarter, and increased $50.9, or 1.1 percent, in
the first nine months of 1994, over the third quarter and first nine
months of 1993, respectively. Components of operating expenses for
the third quarter and first nine months of 1994 and 1993 are as
follows:
Third Quarter Nine-Month Period
% Change %
1994 1993 1994 1993 Change
Cost of services
and $ 692.9 $ 652.0 6.3% $ 1,992.1 $ 1,870.2 6.5%
products
Selling, general
and 485.1 558.4 (13.1) 1,425.9 1,508.9 (5.5)
administrative
Depreciation and
amortization 422.2 421.3 0.2 1,266.1 1,254.1 1.0
Total $ 1,600.2 $ 1,631.7 (1.9)% $ 4,684.1 $ 4,633.2 1.1%
Cost of services and products increased for the third quarter and
first nine months of 1994 due primarily to increased switching
system software license fees, including fees related to enhanced
services, and Texas primary toll carrier access expenses
discussed above. This increase was partially offset by the
absence of expenses related to third quarter 1993 flood damage in
portions of the Midwest.
Selling, general and administrative expenses in 1993 included a
one-time charge for the restructuring of operations. The charge
related to costs of severance, relocation and benefits for 800
management positions eliminated through October 1993, reducing
net income by approximately $35. Decreases in expenses in the
third quarter and first nine months of 1994 were also due to
savings associated with 1993 force reductions and other cost
control measures. These decreases were partially offset by
higher pension benefit expenses and operating taxes.
Depreciation and amortization were flat in the third quarter and
first nine months of 1994 due primarily to a change in plant
level and composition offset by the completion of accelerated
regulatory amortization of certain analog equipment.
Interest expense decreased $10.3, or 10.7 percent, and $35.8, or
12.0 percent, in the third quarter and first nine months of 1994,
respectively, due primarily to lower interest rates on debt refinanced
in 1993. For the nine-month period, interest expense also declined
due to the recording of interest expense associated with the
settlement of federal income tax audit issues in the second quarter of
1993.
Federal income tax expense increased $40.8, or 55.5 percent, in the
third quarter and $93.2, or 35.0 percent, for the first nine months of
1994 due primarily to higher income before income taxes. Comparisons
to 1993 are also affected by a one-time net reduction of expense in
the third quarter of 1993 due to adjustment of deferred tax assets and
liabilities to reflect changes in federal and state corporate income
tax rates.
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
Regulatory Developments
Missouri - In August 1994, the Telephone Company, the Missouri Public
Service Commission (MPSC) and the Office of Public Counsel (OPC)
reached an agreement that will resolve the Telephone Company's appeal
of the MPSC's December 1993 rate reduction order. The agreement
requires the Telephone Company to implement annual rate reductions of
$69.6 effective October 1, 1994, representing rate reductions of $84.6
in the original December 1993 MPSC order, offset by an increase of $15
to recover a portion of incremental costs associated with
postretirement benefit accruals. In addition, customers will be given
one-time credits totaling $65 for rate reductions, accrued and paid to
the Cole County Circuit Court since the beginning of the year under
the original order.
The agreement extends through December 31, 1998. During this period,
the agreement provides that there will be no proposed rate increases
by the Telephone Company and no sharing of earnings. In addition,
during the period of the agreement the Telephone Company will not be
subject to earnings review. The agreement does not preclude the
Telephone Company from increasing its revenues through the
introduction of new or additional services or features during this
period.
Additionally, the Telephone Company has committed to invest an average
of $275 annually in capital expenditures during the term of the
agreement, of which $35 will be earmarked for advanced
telecommunications technology, including fiber optic infrastructure
development, elimination of party line service, distance learning,
telemedicine applications and centers for interactive video
telecommunications.
Other Business Matters
Regulatory Accounting - The Telephone Company currently accounts for
the economic effects of regulation in accordance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation" (Statement No. 71). Statement No. 71
requires deferral of certain costs and obligations based on regulatory
actions (regulatory assets and liabilities). In addition, under
Statement No. 71, telephone plant is depreciated using rates set by
regulators in a joint federal and state triennial review process.
These rates are usually lower than those established by unregulated
companies. Without a complete historical assessment of the
differences between regulatory and competitive environments, it is not
practicable to estimate what depreciation would have been absent
regulation. The Telephone Company will present proposed depreciation
rates for 1995 through 1997 to federal and state regulators in
triennial review meetings scheduled for mid-1995.
Continued application of Statement No. 71 is appropriate only if it is
reasonable to assume that rates can be charged to and collected from
customers which are adequate to recover costs. This assumption
requires, among other things, consideration of anticipated changes in
levels of demand or competition during the recovery period for any
capitalized costs. It is management's opinion that application of
Statement No. 71 to the Telephone Company remains appropriate at this
time. However, due to the rapid pace of change in the
telecommunications industry, the Telephone Company must continually
assess its position with respect to Statement No. 71. If, as a result
of actual and anticipated increases in competition, technological
developments, and other changes in the telecommunications industry,
including the manner of determining rates, the Telephone Company
determines that it no longer qualifies for the provisions of Statement
No. 71, the Telephone Company would be required to eliminate its
regulatory assets and liabilities, and to adjust the carrying amount
of its telephone plant to the extent that it determines that such
amount is not recoverable. Management expects that the resulting
non-cash, extraordinary charge would be material. Because of
uncertainties regarding the timing, extent and potential combination
of circumstances which would cause the Telephone Company to
discontinue application of Statement No. 71, the magnitude of this
charge cannot be reasonably estimated at this time.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three-
month period ended September 30, 1994.
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.
Southwestern Bell Telephone Company
November 8, 1994 /s/ Edward L. Glotzbach
Edward L. Glotzbach
Vice President-Chief Financial
Officer and Treasurer (Principal
Accounting/Financial Officer)
<TABLE>
EXHIBIT 12
SOUTHWESTERN BELL TELEPHONE COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
DOLLARS IN MILLIONS
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <,C> <C>
Income Before Income Taxes,
Extraordinary Loss and
Cumulative Effect of Changes in
Accounting Principles $1,238.1 $1,072.7 $1,424.2 $1,324.7 $1,286.3 $1,319.4 $1,268.9
Add: Interest Expense 261.6 297.4 385.2 408.7 456.3 439.3 476.6
1/3 Rental Expense 18.2 16.2 22.8 27.6 22.7 29.6 28.2
Adjusted Earnings $1,517.9 $1,386.3 $1,832.2 $1,761.0 $1,765.3 $1,788.3 $1,773.7
Total Interest Charges $ 261.6 $ 297.4 $ 385.2 $ 408.7 $ 456.3 $ 439.3 $ 476.6
1/3 Rental Expense 18.2 16.2 22.8 27.6 22.7 29.6 28.2
Adjusted Fixed Charges $ 279.8 $ 313.6 $ 408.0 $ 436.3 $ 479.0 $ 468.9 $ 504.8
Ratio of Earnings to Fixed Charges 5.42 4.42 4.49 4.04 3.69 3.81 3.51
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SOUTHWESTERN BELL TELEPHONE COMPANY'S SEPTEMBER 30, 1994 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 16,200
<SECURITIES> 0
<RECEIVABLES> 1,492,400
<ALLOWANCES> 22,400
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 1,998,800
<PP&E> 26,727,300
<DEPRECIATION> 11,081,600
<TOTAL-ASSETS> 17,964,300
<CURRENT-LIABILITIES> 3,273,300
<BONDS> 4,267,500
<COMMON> 1,000
0
0
<OTHER-SE> 5,338,500
<TOTAL-LIABILITY-AND-EQUITY> 17,964,300
<SALES> 0<F2>
<TOTAL-REVENUES> 6,202,400
<CGS> 0<F3>
<TOTAL-COSTS> 1,992,100
<OTHER-EXPENSES> 1,266,100
<LOSS-PROVISION> 58,400
<INTEREST-EXPENSE> 261,600
<INCOME-PRETAX> 1,238,100
<INCOME-TAX> 405,000
<INCOME-CONTINUING> 833,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 833,100
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> THIS AMOUNT IS IMMATERIAL.
<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-REVENUE" TAG.
<F3> COST OF TANGIBLE GOODS SOLD IS INCLUDED IN COST OF SERVICES AND PRODUCTS
IN THE FINANCIAL STATEMENTS AND THE "TOTAL-COST" TAG, PURSUANT TO
REGULATION S-X, RULE 5-03(B).
</FN>
</TABLE>
