<PAGE>
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 September 30, 1995
________________________________________________
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 0-873
_________________________________________________________
PACIFIC TELECOM, INC.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Washington 91-0644974
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
805 Broadway, P.O. Box 9901, Vancouver, Washington 98668 - 8701
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (360)905-5800
______________________________
No Change
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, no par value 100 Shares
_______________________________________________________________________________
(Title of Class) (Outstanding at November 9, 1995)
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H
(1) (A) AND
(B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE
FORMAT.
<PAGE>
PACIFIC TELECOM, INC.
INDEX
_____
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION: PAGE NO.
_______
<S> <C>
Item 1 - Financial Statements:
Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Income -
Three and nine months ended September 30, 1995
and 1994 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1995 and 1994 5
Condensed Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION:
_________________
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
- 2 -
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
<CAPTION>
PACIFIC TELECOM, INC.
Consolidated Balance Sheets
(Unaudited)
ASSETS
______
September 30, December 31,
1995 1994
_____________ ___________
(In thousands)
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 4,233 $ 9,883
Accounts receivable 72,919 108,977
Accounts and notes receivable - affiliates 41,752 1,832
Material and supplies (at average cost) 8,272 14,775
Inventory - North Pacific Cable 60,582 62,777
Other 13,725 16,045
_________ _________
Total current assets 201,483 214,289
Investments 120,862 123,610
Plant in service:
Telecommunications 1,454,134 1,550,553
Other 22,557 22,115
Less accumulated depreciation 634,046 799,797
_________ _________
842,645 772,871
Construction work in progress 9,382 52,667
_________ _________
Net plant 852,027 825,538
Intangible assets - net 358,407 252,870
Deferred charges 16,356 26,644
--------- ---------
Total assets $1,549,135 $1,442,951
========= =========
LIABILITIES AND CAPITALIZATION
______________________________
Current liabilities:
Currently maturing long-term debt $ 15,683 $ 15,601
Notes payable 35,000 21,713
Accounts payable 56,846 69,515
Income taxes payable 10,480 -
Accrued liabilities 50,752 46,371
Dissenters' rights liability 40,473 -
Accrued access and unearned revenue 4,824 21,892
_________ ________
Total current liabilities 214,058 175,092
Long-term debt 394,204 376,997
Deferred income taxes 100,347 95,966
Unamortized investment tax credits 7,436 13,809
Other long-term liabilities 65,652 97,131
Minority interest 17,175 16,183
Shareholders' equity:
Common stock - 19,810
Additional paid-in capital 225,919 206,231
Unearned stock compensation - (442)
Retained earnings 524,344 442,174
_________ _________
Total shareholders' equity 750,263 667,773
_________ _________
Total liabilities and capitalization $1,549,135 $1,442,951
========= =========
<FN>
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
PACIFIC TELECOM, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Operating revenues:
Local network service $ 30,737 $ 24,722 $ 87,948 $ 70,917
Network access service 54,435 42,088 155,171 125,485
Long distance network service 23,601 82,747 149,946 208,276
Private line service 4,673 14,499 34,270 43,733
Sales of cable capacity 735 1,665 3,419 4,252
Cellular 10,385 7,105 24,532 16,905
Other 18,875 21,622 62,210 61,208
_______ _______ _______ _______
Total operating revenues 143,441 194,448 517,496 530,776
_______ _______ _______ _______
Operating expenses:
Plant support 26,922 30,552 89,648 85,937
Depreciation and amortization 24,017 25,966 81,249 79,584
Leased circuits 2,426 6,764 18,933 19,980
Access expense 8,025 23,869 53,002 69,462
Other operating expense 8,146 9,268 28,902 26,751
Cost of cable sales 471 1,050 2,195 2,704
Customer operations 15,669 17,900 53,672 54,506
Administrative support 14,633 20,040 53,039 55,996
Taxes other than income taxes 3,948 4,087 12,024 11,461
_______ _______ _______ _______
Total operating expenses 104,257 139,496 392,664 406,381
_______ _______ _______ _______
Operating income 39,184 54,952 124,832 124,395
_______ _______ _______ _______
Other income (expense):
Interest expense (8,858) (8,712) (30,326) (26,629)
Interest income 516 594 1,593 806
Gain (Loss) on sale of investment 66,508 (338) 66,508 2,828
Other (281) (2,241) (5,150) (6,486)
_______ ______ _______ _______
Other income (expense) - net 57,885 (10,697) 32,625 (29,481)
_______ ______ _______ _______
Income before income taxes 97,069 44,255 157,457 94,914
Income taxes 12,819 14,574 36,068 31,799
_______ ______ _______ _______
Net income $ 84,250 $ 29,681 $121,389 $ 63,115
======= ======= ======= =======
<FN>
See accompany notes to consolidated financial statements.
</TABLE>
- 4 -
<PAGE>
PACIFIC TELECOM, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
_________________
1995 1994
______ _____
(In thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $121,389 $ 63,115
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 87,553 84,868
Deferred income taxes and investment tax credits, net (1,488) (70,893)
Gain on sale of investment (66,508) (2,725)
Gains from unconsolidated entities, net (2,534) (922)
Accounts receivable and other current assets (4,052) (10,009)
Inventory - North Pacific Cable 2,194 2,704
Accounts payable and accrued liabilities (2,951) 35,806
Other (4,311) 2,752
_______ _______
Net cash provided by operating activities 129,292 104,696
_______ _______
Cash Flows from Investing Activities:
Construction expenditures (88,236) (77,139)
Cost of Colorado and Washington asset acquisitions (288,746) -
Proceeds from sale of Alascom 235,076 75,000
Investments in and advances to affiliates, net (2,533) (21,008)
Proceeds from sales of assets 3,974 1,288
_______ _______
Net cash used by investing activities (140,465) (21,859)
_______ _______
Cash Flows from Financing Activities:
Increase (decrease) of short-term debt 27,023 (9,000)
Proceeds from issuance of long-term debt 77,148 8,006
Dividends paid (39,219) (39,214)
Payments of long-term debt (59,748) (40,207)
Sale (purchase) of common stock 319 (234)
________ ________
Net cash provided (used) by financing activities 5,523 (80,649)
_______ _______
(Decrease) increase in Cash and Temporary Cash Investments (5,650) 2,188
Cash and Temporary Cash Investments at Beginning of Period 9,883 4,861
_______ _______
Cash and Temporary Cash Investments at End of Period $ 4,233 $ 7,049
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the nine months ended September 30 for:
Interest $ 34,244 $31,398
Income Taxes $ 26,481 $73,712
Noncash Investing and Financial Activities:
Stock received as consideration in
sale of subsidiaries $ - $16,564
Unrealized loss on securities available-for-sale $ - $ 174
<FN>
See accompanying notes to consolidated financial statemets.
</TABLE>
- 5 -
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
1. The consolidated financial statements include all normal adjustments which,
in the opinion of management, are necessary to present fairly the
consolidated financial position at September 30, 1995, and the consolidated
results of operations for the three and nine months ended September 30,
1995 and 1994 and cash flows for the nine months ended September 30, 1995
and 1994. These consolidated financial statements should be read in
conjunction with the financial statements and related notes included in the
latest annual report filed on Form 10-K of Pacific Telecom, Inc. (Company).
The consolidated results of operations presented herein are not necessarily
indicative of the results to be expected for the year. The 1995
consolidated financial statements reflect certain reclassifications to
conform to the current year presentations.
2. The Company is a wholly-owned subsidiary of PacifiCorp Holdings, Inc.
(Holdings), which is a wholly-owned subsidiary of PacifiCorp. On September
27, 1995, holders of a majority of the approximately 5.3 million shares of
outstanding common stock held by minority shareholders voted in favor of the
merger of a wholly-owned subsidiary of Holdings into the Company. As a
result of the merger, the common stock held by minority shareholders (other
than shares as to which dissenters' rights were perfected) were converted
into the right to receive $30.00 per share in cash, and the Company became a
wholly-owned subsidiary of Holdings with 100 shares of no par value common
stock outstanding. In addition, a liability in the amount of $40.5 million
was accrued for amounts to be paid to dissenters in the merger based on an
assumed $30.00 per share fair value for their shares. The Company is
accruing interest on this liability at a rate equal to the Company's average
short-term borrowing rate. The Company also recorded a receivable from
Holdings in the amount of the accrued liability to dissenters.
3. Certain loan agreements contain provisions restricting the payment of cash
dividends. Retained earnings of approximately $272.2 million were available
for dividends and other distributions at September 30, 1995.
The Company's ratio of earnings to fixed charges for the nine months ended
September 30, 1995, calculated in accordance with Item 503 of Regulation S-K
under the Securities Exchange Act of 1934, was 4.9 to 1.
4. The Company's effective combined state and federal income tax rates were
22.9 percent and 33.5 percent for the nine months ended September 30, 1995
and 1994, respectively. The difference between taxes calculated at the
statutory federal tax rates and the effective combined rates for 1995 and
1994 is reconciled as follows:
<TABLE>
<CAPTION>
1995 1994
____ ____
<S> <C> <C>
Federal statutory rate 35.0% 35.0%
State income taxes, net of federal benefit 2.8 1.0
Amortization of investment tax credits (1.6) (3.4)
Amortization of excess deferred income taxes (.4) (1.0)
Amortization of excess cost 1.1 1.9
Alascom Gain (a) (14.8) -
Other .8 -
____ ____
Effective tax rate 22.9% 33.5%
==== ====
</TABLE>
(a) The financial statement gain on the sale of Alascom was in excess of
the federal and state taxable gain because the tax basis in Alascom was
greater than the book basis. The tax basis increased due to Alascom's
required payment of taxes on the $150 million in transition payments to
be paid by AT&T under a 1994 Federal Communications
- 6 -
<PAGE>
Commission (FCC) order. The Company has not historically provided
deferred tax liabilities or assets under FAS 109 for book/tax
differences on investments in subsidiaries. A deferred tax asset with
respect to the book/tax difference relating to Alascom was not recorded
in 1994 due to the uncertainty of consummating the sale. As a result,
the benefit of the book/tax differences were realized upon the sale in
1995.
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1995 1994 1995 1994
____ ____ ____ ____
(In thousands)
<S> <C> <C> <C> <C>
Federal income taxes $10,172 $15,622 $29,254 $30,314
State income taxes 2,647 (1,048) 6,814 1,485
______ ______ ______ ______
$12,819 $14,574 $36,068 $31,799
====== ====== ====== ======
Income taxes currently payable $12,097 $78,938 $37,985 $102,697
Deferred income taxes 1,394 (63,236) 754 (67,515)
Amortization of deferred
investment tax credits (672) (1,128) (2,671) (3,383)
______ ______ ______ _______
$12,819 $14,574 $36,068 $ 31,799
====== ====== ====== =======
5. On February 15, 1995, the Company acquired local exchange assets in Colorado
representing 45 exchanges serving approximately 53,000 access lines from US
WEST Communications, Inc. (USWC) for approximately $200 million in cash.
"Net plant" increased $128.4 million and "Intangibles" increased $78.2
million as a result of the acquisition. Short-term debt increases of $197.9
million and an escrow account of $4.2 million included in "Investments"
provided the cash to fund the acquisition. The Company reclassified from
"Construction work in progress" to "Plant in service - Telecommunications"
$33.4 million relating to the construction and upgrade program the Company
began in 1993 after signing the definitive sale agreement.
6. On August 7, 1995, the Company closed the sale of the stock of Alascom, Inc.
(Alascom) to AT&T Corp. (AT&T) in a transaction providing $365.5 million in
proceeds. Under the terms of the agreement, AT&T paid $290.5 million in cash
for the Alascom stock and for settlement of all past cost study issues. AT&T
also agreed to allow the Company to retain the $75 million transition payment
made by AT&T to Alascom in July 1994 pursuant to a FCC order. AT&T made a
down payment of $30 million to the Company upon signing the stock purchase
agreement in October 1994. The remaining $260.5 million was paid when the
transaction closed and was used, primarily, to repay short-term debt.
Summarized income statement data for Alascom are as follows:
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
___________________ _________________
1995 1994 1995 1994
______ ______ ______ ______
(In thousands)
<S> <C> <C> <C> <C>
Operating revenues $28,849 $101,352 $193,126 $261,092
Operating income 6,489 32,850 36,914 63,638
- 7 -
<PAGE>
7. On September 30, 1995, the Company acquired local exchange
assets in Washington representing 26 exchanges serving
approximately 20,000 access lines from USWC for approximately
$86 million in cash. "Net plant" increased $58.6 million and
"Intangibles" increased $34.2 million as a result of the
acquisition. Debt increases of $80 million and an escrow
account of $2.1 million included in "Investments" provided most
of the cash to fund the acquisition.
8. On October 20, 1995, the Company acquired local exchange
assets in Oregon representing 23 exchanges serving
approximately 16,000 access lines from USWC for approximately
$81.5 million in cash. "Net plant" increased $58.4 million
and "Intangibles" increased $23.1 million as a result of the
acquisition. Series "B" Medium-Term Notes of $75.5 million
with a ten-year term at 6.625 percent and an escrow account of
$2.1 million included in " Investments" provided most of the
cash to fund the acquisition.
- 8 -
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations*
NINE MONTHS ENDED SEPTEMBER 30
RESULTS OF OPERATIONS
The Pacific Telecom, Inc.'s (Company's) net income for the nine
months ended September 30, 1995 was $121.4 million, an increase of
92.3 percent compared to net income of $63.1 million for the same
period in 1994. This increase is attributable to the completion of
the sale of Alascom on August 7, 1995. Operating income increased
less than one percent or $.4 million for the first nine months of
1995 compared to the same period in 1994. This increase was
attributable in part to the acquisition of local exchange assets in
Colorado which contributed $15.0 million to operating income. The
Colorado asset acquisition, which closed on February 15, 1995,
included 45 exchanges serving approximately 53,000 access lines.
Also increasing operating income were increases resulting from
local exchange company (LEC) internal access line growth, revised
local exchange revenue estimates for prior years, cellular customer
growth, and increased long lines equipment resale and installation
activities. Offsetting these increases was a decrease in operating
income resulting from the sale of Alascom. Operating revenues for
the first nine months of 1995 were $517.5 million, a decrease of
$13.3 million, or three percent, compared to the first nine months
of 1994. Operating expenses for the first nine months of 1995 were
$392.7 million, a decrease of $13.7 million, or three percent,
compared to the first nine months of 1994.
In May 1995, the North Pacific Cable (NPC) system manufacturers
issued their final investigation report on the cause of the
February 5, 1995 system outage. The report concluded that the
outage was caused by failure of components covered under existing
contractual warranty provisions. NPC's warranty provision requires
the contractor to pay for incurred marine operations charges and to
replace spares and materials used during the repair. The NPC
system also experienced an outage on May 23, 1995. The
manufacturers' investigation report on this outage concluded that
the outage was caused by an external agency hooking the cable and
dragging it on the sea bed until the cable was damaged. On October
1, 1995, the NPC system experienced another outage. The fault
occurred approximately 20 miles off shore of the Japan marine
terminal. The cableship left its home port of Victoria, British
Columbia within 24 hours of the outage and began repair operations
on October 18, 1995. Service on the NPC system was restored on
October 29, 1995. The cause of the fault is still under
investigation. The NPC system generates positive cash flow for
the Company.
* Pursuant to General Instruction H (1)(a) and (b) of Form
10-Q, the Company is substituting a management's narrative analysis
of results of operations for Item 2.
- 9-
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following table summarizes the effects of the sale of Alascom
in August 1995 and the acquisition of LEC assets in 1995 on
operating income for the nine month period ended September 30,
1995, when compared to the same period in 1994. Other material
variances are footnoted below:
</TABLE>
<TABLE>
<CAPTION>
Nine ------------ Variance ----------- Nine
Months Alascom Months
Ended August & LEC Ended
September 30, September Acquisition September 30,
1994 1994 1995 Other 1995
------------- --------- ----------- --------- -------------
(in millions)
<S> <C> <C> <C> <C> <C>
Operating revenues:
Local network service $ 70.9 $10.4 $6.7 (a) $ 88.0
Network access service 125.5 24.0 5.7 (b) 155.2
Long distance network service 208.3 $(61.9) 0.3 3.2 (c) 149.9
Private line service 43.7 (9.8) 0.4 34.3
Sales of cable capacity 4.3 (0.9) 3.4
Cellular 16.9 7.6 (d) 24.5
Other 61.2 (3.3) 1.8 2.5 (e) 62.2
----- ---- ---- ---- -----
Total operating revenues 530.8 (75.0) 36.5 25.2 517.5
----- ---- ---- ---- -----
Operating expenses:
Plant support 85.9 (7.9) 5.0 6.7 (f) 89.7
Depreciation and amortization 79.6 (5.3) 8.6 (1.6)(g) 81.3
Leased circuits 20.0 (3.9) 2.8 (h) 18.9
Access expense 69.5 (15.8) (0.7) 53.0
Other operating expense 26.7 (2.7) 1.3 3.6 (i) 28.9
Cost of cable sales 2.7 (0.5) 2.2
Customer operations 54.5 (4.7) 2.1 1.8 (j) 53.7
Administrative support 56.0 (5.7) 3.3 (0.6) 53.0
Taxes other than income taxes 11.5 (0.4) 1.2 (0.3) 12.0
----- ---- ---- ---- -----
Total operating expenses 406.4 (46.4) 21.5 11.2 392.7
----- ---- ---- ---- -----
Operating income $124.4 $(28.6) $15.0 $14.0 $124.8
===== ==== ==== ==== =====
</TABLE>
(a) Revenue from LEC access line growth of $2.3 million, LEC
nonrecurring charges of $1.7 million relating to customer
growth, extended area services of $1.2 million and enhanced
services of $.6 million combined to contribute most of the
$6.7 million increase in local network service revenue.
(b) Network access service grew by $5.7 million, with $4.3
million resulting from revised LEC revenue estimates for
prior years and $.9 million resulting from access line
growth.
(c) Long distance network service increased by $3.2 million,
with $5.9 million due to interim settlements with AT&T
through July 1994, offset in part by $3.7 million of revised
long lines revenue estimates.
(d) Cellular revenue grew $7.6 million due to growth in
customers.
- 10 -
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(e) Other revenue increased $2.5 million as a result of a $3.1
million increase in long lines installation activities and
equipment resale.
(f) Plant support grew by $6.7 million due to increases of $3.2
million for LEC project work, growth in the customer base
and network upgrades, $1.2 million due to growth in cellular
operations, $.8 million for long lines equipment resale
activities and $.6 million due to a one-time energy
efficiency project at the long lines toll center.
(g) Depreciation expense was lower by $1.6 million, which
included a $4.6 million reduction due to the Alaska LEC
rate decrease ordered in December 1994 and a $2.4 million
reduction due to the decrease in long lines depreciable
plant balances resulting from the $75 million transition
payment received from AT&T in July 1994. The decreases were
offset in part by $2.9 million due to increased LEC
depreciable plant balances, $.9 million for increased
amortization relating to the Colorado acquisition, $.7
million due to growth in cellular operations and $.5 million
for additional transponders on the long lines satellite.
(h) Leased circuits expense increased by $2.8 million, of which
$1.6 million was attributable to restoration services after
the cable outages in 1995 and $.5 million was due to long
lines retroactive billings.
(i) Other operating expense increased $3.6 million due to
increases of $1.3 million relating to cellular customer
growth and $1.1 million relating to updating LEC plant
records and the development and conversion to new LEC plant
record systems.
(j) Customer operations was higher by $1.8 million primarily due
to a $1.7 million increase in cellular costs relating to
customer growth.
Other income - net for the first nine months of 1995 was $32.6
million, which included a $66.5 million pre-tax gain on the sale
of Alascom. Interest expense increased $3.7 million due to the
short-term borrowings used to fund the Colorado asset
acquisition. Other expense in the first nine months of 1995
included $1.4 million in costs relating to Holdings' offer to
purchase the minority interest in the Company. Cellular equity
income increased $2.8 million, while increased cellular
amortization offset the income by $1.1 million. An interest rate
swap buy-out raised 1994 expenses by $1.4 million.
- 11 -
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Income taxes increased due to higher taxable income and
reductions in tax benefits relating to amortization of investment
tax credits and excess deferred taxes. See Note 4 to the
Consolidated Financial Statements for an explanation of the tax
impact of the gain on the sale of Alascom.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
12 Statements re Computation of Ratios
27 Financial Data Schedule (filed electronically
only)
(b) Reports on Form 8-K
On Form 8-K dated September 27, 1995, under Item 5.
"Other Events," the Company reported information with
respect to the minority shareholder approval of the
Agreement and Plan of Merger, dated as of March 9, 1995,
by and among Pacific Telecom, Inc., PacifiCorp Holdings,
Inc. and PXYZ Corporation.
On Form 8-K dated September 30, 1995, under Item 2.
"Acquisition and Disposition of Assets," the Company
reported the purchase of local exchange assets in
Washington from US WEST Communications, Inc.
- 12 -
<PAGE>
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.
Pacific Telecom, Inc.
---------------------------
(Registrant)
Date: November 9, 1995 /s/James H. Huesgen
----------------------------
James H. Huesgen
Executive Vice President and
Chief Financial Officer
- 13 -
<PAGE>
<TABLE>
EXHIBIT 12
Pacific Telecom, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Dollar amounts in millions)
<CAPTION>
Nine
Months
Ended
September 30, Year Ended December 31,
___________________________________________________
1995 1994 1993 1992 1991 1990
_____________ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
Earnings, as defined*:
Income from continuing operations
before income taxes $157.5 $122.2 $ 82.9 $99.8 $120.4 $137.5
Add:
Fixed charges 40.8 48.6 59.5 63.2 67.7 49.2
Equity losses of less than 50%
owned persons - - - .9 .5 .7
Minority interest 1.0 1.0 .6 .1 2.0 4.0
_____ _____ _____ _____ _____ _____
Total earnings $199.3 $171.8 $143.0 $164.0 $190.6 $191.4
===== ===== ===== ===== ===== =====
Fixed charges:
Interest $30.3 $34.7 $44.3 $52.1 $55.0 $40.1
Interest portion of rental expense 10.5 13.9 15.2 11.1 12.7 9.1
____ ____ ____ ____ _____ ____
Total fixed charges $40.8 $48.6 $59.5 $63.2 $67.7 $49.2
==== ==== ==== ==== ==== ====
Ratio of earnings to fixed charges 4.9 3.5 2.4 2.6 2.8 3.9
==== ==== ==== ==== ==== ====
<FN>
* For the purpose of computing these ratios, "earnings" represents the aggregate of (a) income from continuing
operations before income taxes, (b) fixed charges, (c) equity losses of less than 50% owned persons and (d)
minority interest. Equity losses of less than 50% owned persons are added to income from continuing operations
before income taxes since the Company does not guarantee the debt of such persons. "Fixed Charges" consist
of interest charges and an estimated amount representing the interest portion of rental expense.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1995 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 834348
<OTHER-PROPERTY-AND-INVEST> 138541
<TOTAL-CURRENT-ASSETS> 201483
<TOTAL-DEFERRED-CHARGES> 16356
<OTHER-ASSETS> 358407
<TOTAL-ASSETS> 1549135
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 225919
<RETAINED-EARNINGS> 524344
<TOTAL-COMMON-STOCKHOLDERS-EQ> 750263
0
0
<LONG-TERM-DEBT-NET> 344204
<SHORT-TERM-NOTES> 35000
<LONG-TERM-NOTES-PAYABLE> 50000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 15683
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 353985
<TOT-CAPITALIZATION-AND-LIAB> 1549135
<GROSS-OPERATING-REVENUE> 517496
<INCOME-TAX-EXPENSE> 36068
<OTHER-OPERATING-EXPENSES> 392664
<TOTAL-OPERATING-EXPENSES> 428732
<OPERATING-INCOME-LOSS> 88764
<OTHER-INCOME-NET> 62951
<INCOME-BEFORE-INTEREST-EXPEN> 151715
<TOTAL-INTEREST-EXPENSE> 30326
<NET-INCOME> 121389
0
<EARNINGS-AVAILABLE-FOR-COMM> 121389
<COMMON-STOCK-DIVIDENDS> 39219
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 129292
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
