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, 1995
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 SBC COMMUNICATIONS INC.,
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
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Operating Revenues
Local service $ 1,085.1 $ 1,012.4 $ 3,192.8 $ 2,995.1
Network access 780.8 707.7 2,290.7 2,094.9
Long-distance service 205.8 238.9 615.4 685.9
Other 168.7 142.0 494.7 426.5
Total operating revenues 2,240.4 2,101.0 6,593.6 6,202.4
Operating Expenses
Cost of services and products 705.0 692.9 2,055.0 1,992.1
Selling, general and administrative 530.7 485.1 1,539.7 1,425.9
Depreciation and amortization 442.9 422.2 1,325.9 1,266.1
Total operating expenses 1,678.6 1,600.2 4,920.6 4,684.1
Operating Income 561.8 500.8 1,673.0 1,518.3
Other Income (Expense)
Interest expense (86.5) (86.0) (258.4) (261.6)
Other expense - net (5.6) (7.4) (27.8) (18.6)
Total other income (expense) (92.1) (93.4) (286.2) (280.2)
Income Before Income Taxes and
Extraordinary Loss 469.7 407.4 1,386.8 1,238.1
Income Taxes
Federal 147.6 114.3 424.1 359.6
State and local 16.6 14.6 49.9 45.4
Total income taxes 164.2 128.9 474.0 405.0
Income Before Extraordinary Loss 305.5 278.5 912.8 833.1
Extraordinary Loss from
Discontinuance of Regulatory
Accounting, net of tax (2,819.3) - (2,819.3) -
Net Income (Loss) $(2,513.8) $ 278.5 $(1,906.5) $ 833.1
See Notes to Financial Statements.
SOUTHWESTERN BELL TELEPHONE COMPANY
BALANCE SHEETS
Dollars in millions
September 30, December 31,
1995 1994
Assets (Unaudited)
Current Assets
Cash and cash equivalents $ 50.5 $ 46.1
Accounts receivable - net of allowances
for uncollectibles of $23.1 and $15.2 1,496.8 1,378.5
Material and supplies 129.9 141.8
Deferred charges 56.7 48.1
Deferred income taxes 190.7 184.8
Prepaid expenses and other current assets 137.8 87.1
Total current assets 2,062.4 1,886.4
Property, Plant and Equipment - at cost 27,698.5 26,963.1
Less: Accumulated depreciation and amortization 16,657.1 11,227.1
Property, Plant and Equipment - Net 11,041.4 15,736.0
Other Assets 50.4 166.6
Total Assets $ 13,154.2 $ 17,789.0
Liabilities and Shareowner's Equity
Current Liabilities
Debt maturing within one year $ 762.5 $ 660.2
Accounts payable and accrued liabilities 2,435.1 2,440.1
Total current liabilities 3,197.6 3,100.3
Long-Term Debt 4,217.8 4,268.1
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 158.4 1,728.6
Postemployment benefit obligation 2,560.6 2,632.0
Unamortized investment tax credits 293.9 369.2
Other noncurrent liabilities 69.5 277.3
Total deferred credits and other
noncurrent liabilities 3,082.4 5,007.1
Shareowner's Equity
Common stock - one share, no par value 1.0 1.0
Paid-in surplus 5,034.2 5,389.9
Retained earnings (deficit) (2,378.8) 22.6
Total shareowner's equity 2,656.4 5,413.5
Total Liabilities and Shareowner's Equity $ 13,154.2 $ 17,789.0
See Notes to Financial Statements.
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)
Nine months ended
September 30,
1995 1994
Operating Activities
Net income (loss) $ (1,906.5) $ 833.1
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,325.9 1,266.1
Provision for uncollectible accounts 58.5 58.4
Amortization of investment tax credits (34.4) (45.7)
Pensions and other postemployment benefits (17.8) 9.7
Deferred income tax expense 52.7 (31.7)
Extraordinary loss, net of tax 2,819.3 -
Other - net (249.2) (226.8)
Total adjustments 3,955.0 1,030.0
Net Cash Provided by Operating Activities 2,048.5 1,863.1
Investing Activities
Construction and capital expenditures (1,237.7) (1,162.4)
Net Cash Used in Investing Activities (1,237.7) (1,162.4)
Financing Activities
Net change in short-term borrowings with original
maturities of three months or less (12.8) 375.7
Issuance of other short-term borrowings 91.1 35.5
Repayment of other short-term borrowings (60.0) (12.5)
Issuance of long-term debt 149.7 0.7
Repayment of long-term debt (117.0) (286.7)
Dividends paid (885.4) (835.0)
Net equity received from parent 28.0 -
Net Cash Used in Financing Activities (806.4) (722.3)
Net increase (decrease) in cash and cash equivalents 4.4 (21.6)
Cash and cash equivalents beginning of year 46.1 37.8
Cash and Cash Equivalents End of Period $ 50.5 $ 16.2
Cash paid during the nine months ended September 30 for:
Interest $ 256.3 $ 264.1
Income taxes $ 392.2 $ 572.4
See Notes to Financial Statements.
SOUTHWESTERN BELL TELEPHONE COMPANY
STATEMENTS OF SHAREOWNER'S EQUITY
Dollars in millions
(Unaudited)
Retained
Common Paid-in Earnings
Stock Surplus (Deficit)
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
Balance, December 31, 1994 $ 1.0 $ 5,389.9 $ 22.6
Net income (loss) - - (1,906.5)
Dividend to shareowner - (383.7) (494.9)
Net equity received from parent - 28.0 -
Balance, September 30, 1995 $ 1.0 $ 5,034.2 $(2,378.8)
See Notes to Financial Statements.
* * * *
SELECTED FINANCIAL AND OPERATING DATA
At September 30, or for the nine months then ended: 1995 1994
Return on weighted average total capital * . . . . . . 14.98% 13.34%
Debt ratio . . . . . . . . . . . . . . . . . . . . . 65.22% 49.14%
Network access lines in service (000) # . . . . . . . 14,074 13,507
Access minutes of use (000,000) . . . . . . . . . . . 39,854 35,859
Long-distance messages billed (000). . . . . . . . . . 751,405 773,075
Number of employees . . . . . . . . . . . . . . . . . 47,960 48,790
* 1995 calculated using Income Before Extraordinary Loss.
# 1994 amount has been revised to reflect the most current information
available.
SOUTHWESTERN BELL TELEPHONE COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Dollars in millions
1. PREPARATION OF INTERIM FINANCIAL STATEMENTS -
Southwestern Bell Telephone Company (Telephone Company) is a
wholly-owned subsidiary of SBC Communications Inc. (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 discontinuance of regulatory
accounting discussed in Note 2) 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. Certain
reclassifications have been made to the 1994 financial
statements to conform with the 1995 presentation. 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 1994 Annual Report on Form 10-K.
2. EXTRAORDINARY LOSS - In September 1995, the Telephone
Company discontinued its application of Statement of
Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation" (FAS 71). The rapid
pace of change within the telecommunications industry and
the evolution of the regulatory framework in which the
Telephone Company operates have resulted in price-based
regulation for most of the Telephone Company's revenues and
accelerated competition in the Telephone Company's markets.
Under these conditions, the Telephone Company can no longer
be assured that rates charged to and collected from
customers will be adequate to recover the costs of providing
service, which includes the carrying value of telephone
plant depreciated over relatively long regulator-prescribed
lives. As a result, management determined that the
Telephone Company no longer met the criteria for application
of FAS 71.
Therefore, in September 1995, the Telephone Company
recorded a non-cash, extraordinary charge to net income
of $2,819.3 (after a deferred tax benefit of $1,764.0).
This is comprised of an after-tax charge of $2,897.3 to
reduce the net carrying value of telephone plant,
partially offset by an after-tax benefit of $78.0 for the
elimination of net regulatory liabilities. The
components of the charge are as follows:
Pretax After-
tax
Increase telephone plant accumulated $ 4,657.0 $ 2,897.3
depreciation
Adjust unamortized investment tax (40.9) (25.4)
credits
Eliminate tax-related regulatory (87.5) (87.5)
assets and liabilities
Eliminate other regulatory assets 54.7 34.9
Total $ 4,583.3 $ 2,819.3
The increase in accumulated depreciation of $4,657.0
reflects the effects of adopting depreciable lives for
many of the Telephone Company's plant categories which
more closely reflect the economic and technological lives
of the plant. The adjustment was supported by a
discounted cash flow analysis which estimated amounts of
telephone plant that may not be recoverable from future
discounted cash flows. This analysis included
consideration of the effects of anticipated competition
and technological changes on plant lives and revenues.
Following is a comparison of new lives to those
prescribed by regulators for selected plant categories:
Average Lives (in
Years)
---------------------
Regulator- Estimated
Telephone Plant Category Prescribed Economic
- --------------------------- ---------- --------
Digital switch 17 11
Digital circuit 12 7
Copper cable 24 18
Fiber cable 27 20
Conduit 57 50
The increase in accumulated depreciation also includes an
adjustment of approximately $450 million to fully
depreciate analog switching equipment scheduled for
replacement. Remaining analog switching equipment will
be depreciated using an average remaining life of four
years.
Investment tax credits (ITC) have historically been
deferred and amortized over the estimated lives of the
related plant. The adjustment to ITC reflects the
shortening of those plant lives discussed above.
Regulatory assets and liabilities are related primarily
to accounting policies used by regulators in the
ratemaking process which are different than those used by
non-regulated companies, predominantly in the accounting
for income taxes and deferred compensated absences.
These items are required to be eliminated with the
discontinuance of accounting under FAS 71.
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 income before extraordinary loss of $305.5 for the
third quarter of 1995 and $912.8 for the first nine months
of 1995. The Telephone Company recognized an extraordinary
loss of $2.8 billion from the discontinuance of regulatory
accounting. Net losses for the third quarter and first nine
months of 1995 were $2.5 billion and $1.9 billion,
respectively. Financial results for the third quarters and
first nine months of 1995 and 1994 are summarized as
follows:
------ Third Quarter--------- -------- Nine-Month Period----
Percent Percent
1995 1994 Change 1995 1994 Change
-------- -------- ------ ------- ------- -----
Operating $ 2,240.4 $ 2,101.0 6.6% $ 6,593.6 $ 6,202.4 6.3%
revenues
Operating $ 1,678.6 $ 1,600.2 4.9% $ 4,920.6 $ 4,684.1 5.0%
expenses
Income before
extraordinary $ 305.5 $ 278.5 9.7% $ 912.8 $ 833.1 9.6%
loss
Extraordinary $ (2,819.3) - - $ (2,819.3) - -
loss
Net income $ (2,513.8) $ 278.5 - $ (1,906.5) $ 833.1 -
(loss)
The primary factor contributing to the increase in income
before extraordinary loss during the third quarter and first
nine months of 1995 was growth in demand for services and
products, partially offset by increased depreciation and
selling, general and administrative expense.
The Telephone Company's operating revenues in the third
quarter and first nine months of 1995 increased $139.4, or
6.6%, and $391.2, or 6.3%, over the third quarter and first
nine months of 1994, respectively. Components of operating
revenues for the third quarters and first nine months of
1995 and 1994 are as follows:
----Third Quarter------- -----Nine-Month Period----
Percent Percent
1995 1994 Change 1995 1994 Change
------- -------- ------ ------- -------- ------
Local service $ 1,085.1 $ 1,012.4 7.2% $ 3,192.8 $ 2,995.1 6.6%
Network access
Interstate 517.7 475.4 8.9 1,525.9 1,391.2 9.7
Intrastate 263.1 232.3 13.3 764.8 703.7 8.7
Long-distance 205.8 238.9 (13.9) 615.4 685.9 (10.3)
service
Other 168.7 142.0 18.8 494.7 426.5 16.0
Total $ 2,240.4 $ 2,101.0 6.6% $ 6,593.6 $ 6,202.4 6.3%
Local service revenues increased in the third quarter
and first nine months of 1995 due primarily to
increases in demand, including 4.2% growth in the
number of access lines since September 30, 1994 and
increased demand for enhanced services, including
Caller ID.
Interstate network access revenues increased in the
third quarter and first nine months of 1995 due
primarily to an increase in demand for access services
and growth in end user charges attributable to an
increasing access line base, partially offset by
reduced rates under the Federal
Communications Commission's (FCC) revised price cap
plan which became effective August 1, 1995. Results
for the first nine months of 1994 also reflect a
retroactive billing adjustment that decreased
interstate revenues while increasing intrastate
revenues.
Intrastate network access revenues increased in the
third quarter and first nine months of 1995 due
primarily to increases in demand, including usage by
alternative intraLATA toll carriers. Revenues for the
first nine months of 1994 also include the billing
adjustment noted above.
Long-distance service revenues decreased in the third
quarter and first nine months of 1995 due to
competition-related decreases in residential message
volumes. Competition from interexchange carriers has
continued to increase through advertising and usage of
"10xxx" and "1-800" access numbers. The decrease in
long-distance service revenues is partially offset by
higher access revenues, as noted above.
Other operating revenues consist of the Telephone
Company's non-regulated 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
1995 due to increases in demand for non-regulated
services and products, including Caller ID equipment.
The Telephone Company's operating expenses in the third
quarter and first nine months of 1995 increased $78.4, or
4.9%, and $236.5, or 5.0%, over the third quarter and first
nine months of 1994, respectively. Components of operating
expenses for the third quarters and first nine months of
1995 and 1994 are as follows:
---- Third Quarter------ ---- Nine-Month Period----
1995 1994 Percent 1995 1994 Percent
Change Change
----- ------- ------ --------- -------- -----
Cost of
services and $ 705.0 $ 692.9 1.7% $ 2,055.0 $ 1,992.1 3.2%
products
Selling,
general and 530.7 485.1 9.4 1,539.7 1,425.9 8.0
administrative
Depreciation
and 442.9 422.2 4.9 1,325.9 1,266.1 4.7
amortization
Total $ 1,678.6 $ 1,600.2 4.9% $ 4,920.6 $ 4,684.1 5.0%
Cost of services and products increased for the third
quarter and first nine months of 1995 due primarily to
demand related increases for enhanced services and
annual compensation increases. These increases were
partially offset by a decrease in switching system
software license fees.
Selling, general and administrative expenses increased
in the third quarter and first nine months of 1995 due
to increased advertising, contracted services and
operating taxes. The first nine months of 1995 also
reflect higher benefit expenses, which were flat during
the third quarter due to lower employee and retiree
medical costs in the third quarter.
Depreciation and amortization increased in the third
quarter and first nine months of 1995 due to changes in
plant level and composition and the effect of
depreciation represcription.
Extraordinary Loss - As described in Note 2 to the financial
statements, the Telephone Company recorded an extraordinary
loss of $2.8 billion from discontinuance of regulatory
accounting and reduction in plant asset lives in the third
quarter. Management does not expect a significant increase
in depreciation expense in the near future to result from
the discontinuance of regulatory accounting.
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
REGULATORY DEVELOPMENTS
Oklahoma
On October 30, 1995, the Oklahoma Corporation Commission
(OCC) approved a settlement that resolves pending court
appeals of a 1992 rate order. The settlement ends a dispute
which began in 1989, when the OCC ordered an investigation
into the reasonableness of the Telephone Company's
intrastate rates. An order was issued in August 1992,
requiring the Telephone Company to refund $148.4,
representing revenues in excess of an 11.41% return on
equity for the period April 1991 through the date of the
final order. The order also called for prospective annual
rate reductions of $100.6 effective September 1992, required
an investment of $84 in network modernization over five
years, and lowered the allowed return on equity from 14.25%
to 12.20%.
Under the terms of the settlement agreement, the Telephone
Company will pay a cash settlement of $170 to business and
residential customers, and offer discounts with a retail
value of $268 for certain Telephone Company services.
Previously ordered rate reductions of $100.6 have been
lowered to $84.4, of which $57.1 have already been
implemented. The settlement allows the remaining $27.3 in
rate reductions to be deferred with approximately $8.9
becoming effective in 1996, and the remainder during 1997.
The Telephone Company will continue a previously announced
$84 network modernization plan for rural Oklahoma. The
settlement agreement also provides that no overearnings
complaint can be filed against the Telephone Company until
January 1, 1998. In addition, the OCC will begin exploring
alternative forms of regulation within ten days of the
settlement. The order approving the settlement becomes
effective on November 30, 1995.
Management anticipates that this settlement will not have a
significant impact on earnings. The Telephone Company began
accruing for the order in 1992 and the settlement and
associated costs had been fully accrued as of the end of the
third quarter of 1995.
Missouri
On September 7, 1995, in response to a legal challenge
brought by interexchange carriers and the Missouri Cable TV
Association, the Cole County Circuit Court (Circuit Court)
reversed the August 1994 settlement agreement reached among
the Telephone Company, the Missouri Public Service
Commission (MPSC) and the Office of Public Counsel (OPC).
The settlement agreement had ended a legal dispute with the
MPSC over a December 1993 order. Under the agreement, which
had extended through December 31, 1998, the Telephone
Company implemented annual rate reductions of $69.6, issued
one-time credits to customers totaling $64, and committed to an
average annual capital investment of $275 during the term of
the agreement. Also, it was agreed that the Telephone
Company would not file a general rate case, not increase
basic local exchange service rates and there would be no
sharing of earnings. The MPSC and OPC agreed not to
initiate any complaints regarding the Telephone Company's
earnings prior to January 1, 1999.
The Circuit Court's decision applies primarily to the rate
review moratorium and capital investment agreements. The
decision has no immediate impact on the Telephone Company's
current rates because they were approved by the MPSC in
separate proceedings and were not appealed.
The MPSC and the Telephone Company appealed the Circuit
Court's decision on October 12 and 13, 1995, respectively.
SOUTHWESTERN BELL TELEPHONE COMPANY
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
On September 29, 1995, Southwestern Bell Telephone
Company (Telephone Company) filed a Current Report on
Form 8-K, reporting on Item 5, Other Events. The
Telephone Company announced it was discontinuing the
use of Statement of Financial Accounting Standards No.
71.
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 7, 1995 /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
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Income Before Income Taxes,
Extraordinary Loss and Cumulative
Effect of Changes in
Accounting Principles $ 1,386.8 $1,238.1 $1,585.9 $1,424.2 $1,324.7 $1,286.3 $1,319.4
Add: Interest Expense 258.4 261.6 357.9 385.2 408.7 456.3 439.3
1/3 Rental Expense 7.1 18.2 25.6 22.8 27.6 22.7 29.6
Adjusted Earnings $ 1,652.3 $1,517.9 $1,969.4 $1,832.2 $1,761.0 $1,765.3 $1,788.3
Total Interest Charges $ 258.4 $ 261.6 $ 357.9 $ 385.2 $ 408.7 $ 456.3 $ 439.3
1/3 Rental Expense 7.1 18.2 25.6 22.8 27.6 22.7 29.6
Adjusted Fixed Charges $ 265.5 $ 279.8 $ 383.5 $ 408.0 $ 436.3 $ 479.0 $ 468.9
Ratio of Earnings to Fixed Charges 6.22 5.42 5.14 4.49 4.04 3.69 3.81
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SOUTHWESTERN BELL TELEPHONE COMPANY'S SEPTEMBER 30, 1995
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 50,500
<SECURITIES> 0<F1>
<RECEIVABLES> 1,519,900
<ALLOWANCES> 23,100
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 2,062,400
<PP&E> 27,698,500
<DEPRECIATION> 16,657,100
<TOTAL-ASSETS> 13,154,200
<CURRENT-LIABILITIES> 3,197,600
<BONDS> 4,217,800
<COMMON> 1,000
0
0
<OTHER-SE> 2,655,400
<TOTAL-LIABILITY-AND-EQUITY> 13,154,200
<SALES> 0<F2>
<TOTAL-REVENUES> 6,593,600
<CGS> 0<F3>
<TOTAL-COSTS> 2,055,000
<OTHER-EXPENSES> 1,325,900
<LOSS-PROVISION> 58,500
<INTEREST-EXPENSE> 258,400
<INCOME-PRETAX> 1,386,800
<INCOME-TAX> 474,000
<INCOME-CONTINUING> 912,800
<DISCONTINUED> 0
<EXTRAORDINARY> (2,819,300)
<CHANGES> 0
<NET-INCOME> (1,906,500)
<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 REVENUES" 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>
