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, 1996
_________________________________________
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 October 25, 1996)
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
_____
PART I FINANCIAL INFORMATION: PAGE NO.
_____________________ ________
Item 1 - Financial Statements:
Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Income -
Three and nine months ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995 5
Condensed Notes to Consolidated Financial
Statements 6 - 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 11
PART II OTHER INFORMATION:
_________________
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
-2-
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. - Financial Statements
PACIFIC TELECOM, INC.
Consolidated Balance Sheets
(Unaudited)
ASSETS
______
September 30, December 31,
1996 1995
_____________ ____________
(In thousands)
Current assets:
Cash and temporary cash investments $ 19,427 $ 6,331
Accounts receivable 112,207 81,528
Accounts and notes receivable -
affiliates (Note 2) 40,729 41,234
Material and supplies (at average cost) 10,515 7,082
Inventory - North Pacific Cable 53,919 60,571
Other 5,973 9,522
_________ _________
Total current assets 242,770 206,268
Investments 132,248 124,555
Plant in service:
Telecommunications 1,604,818 1,570,262
Other 22,345 22,655
Less accumulated depreciation 715,605 678,328
_________ _________
911,558 914,589
Construction work in progress 24,360 13,970
_________ _________
Net plant 935,918 928,559
Intangible assets - net 369,836 378,214
Deferred charges 16,795 16,528
_________ _________
Total assets $1,697,567 $1,654,124
_________ _________
_________ _________
LIABILITIES AND CAPITALIZATION
______________________________
Current liabilities:
Currently maturing long-term debt $ 5,728 $ 5,535
Notes payable 34,000 90,000
Accounts payable 70,318 48,395
Accrued liabilities 60,746 58,736
Dissenters' rights 27,472 27,930
Accrued access and unearned revenue 10,525 8,354
_________ _________
Total current liabilities 208,789 238,950
Long-term debt 505,928 459,502
Deferred income taxes 145,561 126,539
Unamortized investment tax credits 5,635 6,929
Other long-term liabilities 42,847 48,502
Minority interest 18,464 18,288
Shareholder's equity:
Common stock - -
Additional paid-in capital 225,943 225,943
Retained earnings 544,400 529,471
_________ _________
Total shareholder's equity 770,343 755,414
_________ _________
Total liabilities and capitalization $1,697,567 $1,654,124
_________ _________
_________ _________
See accompanying notes to consolidated financial statements.
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<PAGE>
PACIFIC TELECOM, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
______ ______ ______ ______
(In thousands)
Operating revenues:
Local network service $ 36,340 $ 30,737 $104,110 $ 87,948
Network access service 64,244 54,435 190,372 155,171
Long distance network service 441 23,601 1,203 149,946
Private line service - 4,673 - 34,270
Sales of cable capacity 6,030 735 8,279 3,419
Cellular 12,990 10,385 32,367 24,532
Other 18,844 18,875 56,487 62,210
_______ _______ _______ _______
Total operating revenues 138,889 143,441 392,818 517,496
_______ _______ _______ _______
Operating expenses:
Plant support 24,841 26,922 69,532 89,648
Depreciation and amortization 25,644 24,017 76,532 81,249
Leased circuits 485 2,426 1,593 18,933
Access expense - 8,025 - 53,002
Other operating expense 8,136 8,146 22,978 28,902
Cost of cable sales 5,126 471 6,652 2,195
Customer operations 13,986 15,669 40,805 53,672
Administrative support 14,350 14,633 45,349 53,039
Taxes other than income taxes 4,766 3,948 14,553 12,024
_______ _______ _______ _______
Total operating expenses 97,334 104,257 277,994 392,664
_______ _______ _______ _______
Operating income 41,555 39,184 114,824 124,832
_______ _______ _______ _______
Other income (expense):
Interest expense (9,996) (8,858) (30,603) (30,326)
Interest income 995 516 2,196 1,593
Gain on sale of subsidiaries
and investments - 66,508 3,705 66,508
Other 892 (281) (929) (5,150)
_______ _______ _______ _______
Other income (expense)
- net (8,109) 57,885 (25,631) 32,625
_______ _______ _______ _______
Income before income taxes 33,446 97,069 89,193 157,457
Income taxes 13,011 12,819 34,697 36,068
_______ _______ _______ _______
Net income $ 20,435 $ 84,250 $ 54,496 $121,389
_______ _______ _______ _______
_______ _______ _______ _______
[FN]
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
PACIFIC TELECOM, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
_________________
1996 1995
______ ______
(In thousands)
Cash Flows from Operating Activities:
Net income $ 54,496 $121,389
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 83,930 87,553
Deferred income taxes and investment
tax credits, net 15,386 (1,488)
Gain on sale of subsidiaries and investments (3,705) (66,508)
Gains from unconsolidated entities, net (4,996) (2,534)
Accounts receivable and other current assets (26,498) (4,052)
Inventory - North Pacific Cable 6,652 2,194
Accounts payable and accrued liabilities 23,877 (2,951)
Other (3,173) (4,311)
_______ _______
Net cash provided by operating activities 145,969 129,292
_______ _______
Cash Flows from Investing Activities:
Construction expenditures (79,585) (88,236)
Cost of businesses acquired - (288,746)
Proceeds from Alaska restructuring - 235,076
Investments in and advances to affiliates (6,495) (2,533)
Proceeds from sales of assets 5,715 3,974
_______ _______
Net cash used by investing activities (80,365) (140,465)
_______ _______
Cash Flows from Financing Activities:
(Decrease) increase in short-term debt (56,000) 27,023
Change in affiliated notes (3,562) -
Proceeds from issuance of long-term debt 51,740 77,148
Sale of common stock - 319
Dividends paid (39,567) (39,219)
Payments of long-term debt (5,119) (59,748)
_______ _______
Net cash (used) provided by
financing activities (52,508) 5,523
_______ _______
Increase (Decrease) in Cash and
Temporary Cash Investments 13,096 (5,650)
Cash and Temporary Cash Investments
at Beginning of Period 6,331 9,883
_______ _______
Cash and Temporary Cash Investments
at End of Period $ 19,427 $ 4,233
_______ _______
_______ _______
Supplemental Disclosures of Cash Flow Information:
Cash paid during the nine months ended September 30 for:
Interest $ 35,727 $ 34,244
Income Taxes $ 12,489 $ 26,481
Noncash Investing Activities:
Liabilities disposed of in connection with
the sale of subsidiaries $ - $ 85,668
[FN]
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
Condensed 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, 1996,
and the consolidated results of operations and cash flows for the
three and nine months ended September 30, 1996 and 1995. 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 presentation. These reclassifications have no effect
on previously stated net income.
2. The Company is a wholly-owned subsidiary of PacifiCorp Holdings,
Inc. (Holdings), which is a wholly-owned subsidiary of PacifiCorp.
See Note 2 to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1995, for information relating to the affiliated note for amounts
to be paid dissenters in connection with the acquisition of
the minority interest of the Company.
3. Certain loan agreements contain provisions restricting the payment
of cash dividends. Retained earnings of approximately $244
million were available for dividends and other distributions at
September 30, 1996.
The Company's ratio of earnings to fixed charges for the nine
months ended September 30, 1996, calculated in accordance with
Item 503 of Regulation S-K under the Securities Exchange Act of
1934, was 3.6 to 1.
4. The Company's effective combined state and federal income tax
rates were 38.9 percent and 22.9 percent for the nine months
ended September 30, 1996 and 1995, respectively. The difference
between taxes calculated at the statutory federal tax rates and
the effective combined rates for 1996 and 1995 is reconciled as
follows:
1996 1995
____ ____
Federal statutory rate 35.0% 35.0%
State income taxes, net of federal benefit 3.6 2.8
Amortization of investment tax credits (1.4) (1.6)
Amortization of excess deferred income taxes (.5) (.4)
Amortization of excess cost 1.8 1.1
Alascom Gain (a) - (14.8)
Other .4 .8
____ ____
Effective tax rate 38.9% 22.9%
____ ____
____ ____
(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 paid by AT&T under a 1994 Federal Communications
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 was realized
upon the sale in 1995.
-6-
<PAGE>
Condensed Notes to Consolidated Financial Statements
(Unaudited)
The components of income tax expense are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ _________________
1996 1995 1996 1995
_______ ______ _______ ______
(In thousands)
Federal income taxes $12,104 $10,172 $29,702 $29,254
State income taxes 907 2,647 4,995 6,814
______ ______ ______ ______
$13,011 $12,819 $34,697 $36,068
______ ______ ______ ______
______ ______ ______ ______
Income taxes currently payable $ 951 $12,097 $19,312 $37,985
Deferred income taxes 12,492 1,394 16,680 754
Amortization of deferred
investment tax credits (432) (672) (1,295) (2,671)
______ ______ ______ ______
$13,011 $12,819 $34,697 $36,068
______ ______ ______ ______
______ ______ ______ ______
5. On August 7, 1995, the Company closed the sale of the stock of
Alascom, Inc. (Alascom) to AT&T Corp. in a transaction providing
$365.5 million in proceeds, with $105 million received during 1994
and $260.5 million received during 1995. See Note 16 to the
Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, for
information relating to this transaction.
6. The Company is pursuing acquisition targets of $268 million in 1996
and $166 million in 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under "Acquisitions" in
this Form 10-Q for information relating to pending acquisitions and
future acquisition opportunities.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations*
Nine Months Ended September 30
_______________________________
Results of Operations
_____________________
The Company's net income for the nine months ended September 30, 1996
was $54.5 million, a decrease of 55 percent compared to net income of
$121.4 million for the same period in 1995. This decrease was attributable
to the sale of Alascom in August, 1995. Operating income decreased eight
percent or $10.0 million in the first nine months of 1996 compared to 1995.
In the first nine months of 1995, Alascom's contribution to operating income
was $36.9 million. This decrease was offset in part by the acquisitions of
local exchange assets in 1995. The Colorado acquisition in February
1995 contributed operating income of $17.8 million in the first nine months
of 1996 and $15.0 million in the first nine months of 1995. Acquisitions
of LEC assets in Washington and Oregon in late September and October
1995 contributed operating income of $11.8 million in the first nine months
of 1996. The resulting net increase in operating income from all
the 1995 acquisitions for the first nine months of 1996 was $14.6 million.
Also increasing operating income were increases resulting from LEC internal
access line growth, revised local exchange revenue estimates for prior years
and cellular customer growth. Operating revenues for the first nine months of
1996 were $392.8 million, a decrease of $124.7 million, or 24 percent,
compared to the same period in 1995. Operating expenses in the first nine
months of 1996 were $278.0 million, a decrease of $114.7 million, or 29
percent, compared to the first nine months of 1995. See Part II,
Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, for information about the North Pacific
Cable.
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
period ended September 30, 1996, when compared to 1995. Other material
variances are footnoted below:
<TABLE>
<CAPTION>
Consolidated Alascom Consolidated
Nine Months Nine Months Variance Nine Months
Ended Ended due to Ended
September 30, September 30, LEC September 30,
1995 1995 Acquisitions Other 1996
____________ _____________ _____________ _______ _____________
(in millions)
<S> <C> <C> <C> <C> <C>
Operating revenues:
Local network service $ 88.0 $ 7.5 $ 8.6 (a) $104.1
Network access service 155.2 29.5 5.7 (b) 190.4
Long distance network service 149.9 $(148.9) .1 .1 1.2
Private line service 34.3 (34.3) -
Sales of cable capacity 3.4 4.9 (c) 8.3
Cellular 24.5 7.8 (d) 32.3
Other 62.2 (9.9) 1.7 2.5 (e) 56.5
_____ _____ ____ ____ _____
Total operating revenues 517.5 (193.1) 38.8 29.6 392.8
_____ _____ ____ ____ _____
Operating expenses:
Plant support 89.7 (26.3) 5.9 .2 69.5
Depreciation and amortization 81.3 (19.6) 10.3 4.5 (f) 76.5
Leased circuits 18.9 (16.3) (1.0)(g) 1.6
Access expense 53.0 (53.0) -
Other operating expense 28.9 (9.3) 1.4 2.0 (h) 23.0
Cost of cable sales 2.2 4.5 (i) 6.7
Customer operations 53.7 (15.8) 1.1 1.8 (j) 40.8
Administrative support 53.0 (14.8) 3.3 3.8 (k) 45.3
Taxes other than income taxes 12.0 (1.1) 2.2 1.5 (l) 14.6
_____ _____ ____ ____ _____
Total operating expenses 392.7 (156.2) 24.2 17.3 278.0
_____ _____ ____ ____ _____
Operating income $124.8 $(36.9) $14.6 $12.3 $114.8
_____ _____ ____ ____ _____
_____ _____ ____ ____ _____
<FN>
_____________________
*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.
-8-
</TABLE>
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(a) Revenue from enhanced services, such as caller name and number
identification, voice messaging, automatic call back, auto
recall and call trace, of $2.4 million, revenue from LEC access
line growth of $3.5 million, LEC installation related charges of
$1.0 million due to customer growth and certain rate increases
and extended area services of $.8 million accounted for most
of the $8.6 million increase in local network service revenue.
(b) Network access service revenue grew by $5.7 million, with
$4.1 million resulting from access line growth and higher
minutes of use and $2.9 million resulting from revised LEC
revenue estimates for prior years. This increase was
partially offset by decreased Universal Service Fund (USF)
support of $1.7 million. The national average cost per access
line to provide service to rural telephone customers (the
USF benchmark) increased while the Company's cost per access
line increased at a rate below the national average. This
caused a slight decrease in the USF support received per
access line.
(c) Sales of cable capacity increased $4.9 million due to higher
circuit sales.
(d) Cellular revenue grew $7.8 million due to growth in customers
and increased roaming revenues.
(e) Other increased $2.5 million mainly due to increased nonregulated
equipment sales of $1.8 million.
(f) Depreciation expense was higher by $4.5 million, which included
$4.0 million due to increased LEC depreciable plant balances and
$.5 million due to growth in cellular operations.
(g) Leased circuits expense decreased $1.0 million in 1996 due to the
cable outage restoration services provided in February and May 1995.
(h) Other operating expense increased $2.0 million due to growth
in cellular operations of $1.2 million and LEC customer growth
of $.8 million.
(i) Cost of cable sales increased by $4.5 million due to higher circuit
sales.
(j) Customer operations expense grew $1.8 million, which included $1.0
million due to growth in cellular operations and $1.0 million
due to LEC customer growth.
(k) Administrative support increased $3.8 million mainly due to higher
corporate support costs for information systems and benefits.
(l) Taxes other than income taxes increased $1.5 million due to higher
property valuations and growth in excise taxes due to increased LEC
revenues.
Other expense - net for the first nine months of 1996 was $25.6 million
and other income-net for the first nine months of 1995 was $32.6 million.
Gain on sale of subsidiaries and investments included $3.7 million for
sales of cellular properties in 1996 and $66.5 million for the sale of
Alascom in 1995. Equity earnings from cellular and telephone investments
increased $2.1 million and diversified company income increased $.6 million
in the first nine months of 1996 compared to the same period in 1995. Other
expense in 1995 included $1.4 million in costs relating to Holdings'
offer to acquire the minority interest in the Company.
-9-
See Part II, Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" under "Income Taxes" and Note
6 to the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, for
information relating to the tax impact of the gain on the sale of Alascom.
The Company has reviewed the Telecommunications Act of 1996 and, based on
the rural nature of the Company's operations, does not believe that the
Act will have a material impact on the Company's financial results.
Acquisitions
____________
The Company has definitive agreements with US WEST Communications, Inc.
and GTE North Incorporated to purchase local exchange telephone
properties in Minnesota and Michigan, respectively. The Minnesota
properties represent 32 exchanges serving 26,600 access lines and
the Michigan properties represent eight exchanges serving 11,100
access lines. These acquisitions are subject to regulatory
approval and are expected to close in the first half of 1997. The
Company has a definitive agreement with the Fairbanks Municipal
Utility System (FMUS) to acquire its telephone and cellular operations
that has 32,000 access lines and 6,800 cellular customers. The sale
of FMUS was approved by a majority of the voters of the City of
Fairbanks in an October 8, 1996 special election. Certain regulatory
approvals are required and closing is estimated for mid-1997.The Company
anticipates that all three acquisitions will require $248 million in
cash, which includes approximately $17 million for cash to be acquired
in the acquisitions. The Company expects to fund these acquisitions
through the issuance of external debt and internally generated funds.
Consistent with the Company's strategy of growing its local telephone
operations in rural areas through acquisitions, the Company currently is
evaluating acquisition opportunities involving certain small independent
telephone companies which serve an aggregate of approximately 20,000
access lines in proximity to the Company's existing telephone operations.
See Part II, Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" under "Acquisitions" and Notes 14 and
15 to the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, for
information about acquisitions.
Liquidity and Capital Resources
_______________________________
During the nine months ended September 30, 1996, construction expenditures
amounted to $79.6 million. These expenditures pertained mainly to network
upgrades and internal growth requirements in the Company's LEC and
cellular operations. The construction expenditures were funded primarily
with cash from operations. In 1996, total construction expenditures
estimated at $114.2 million are expected to be funded primarily through
cash from operations.
The Company has access to funds through its $300 million revolving credit
agreement which terminates in November 1999. At September 30, 1996, no
borrowings were outstanding under this agreement. The revolving credit
agreement also serves as backup for a $100 million commercial paper
program, under which $50 million was outstanding at September 30, 1996.
The Company had $59 million outstanding under other available banking
arrangements at September 30, 1996. Short-term borrowings from other
available banking arrangements of $25 million and commercial paper of
$50 million have been classified as long-term debt based on management's
intent and the Company's ability to support this debt on a long-term
basis. In January 1996, the Company established a $200 million Series
C Medium-term Note program. In August 1996, $50 million of these
notes were issued, with terms of six to 11 years and an average annual
interest rate of 6.9 percent, to replace short-term debt. The
remaining $150 million available for issue is expected to be used primarily
to fund pending and other future acquisitions. At September 30, 1996,
the Company had approval from the Rural Telephone Bank to borrow $17.6
million in additional Rural Utilities Service debt for certain
construction projects.
-10-
<PAGE> Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company has an agreement that allows temporary cash advances to
or from its parent, Holdings. Interest rates on advances from Holdings
are based on Holdings' cost of short-term funds plus 3/8 percent.
Interest rates on advances to Holdings are based on Holdings' cost of
short-term funds. At September 30, 1996, $29.1 million was due from
Holdings for amounts to be paid to dissenters in connection with the
acquisition of the minority interest of the Company and $3.6 million
was due from Holdings for short-term cash advances. (See Note 2 to the
Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 for more
information about this note.)
Any temporary cash or liquidity requirements during 1996 are expected
to be met through utilization of funds available under the
revolving credit agreement or temporary advances from Holdings.
Long-term liquidity requirements are expected to be met through
utilization of funds available under the revolving credit agreement
or the Series C Medium-term Note program. Cash needed to pay
dissenters' rights will be provided by Holdings.
-11-
<PAGE>
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
None
-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: October 25, 1996 /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>
Three
Months
Ended Year Ended December 31,
September 30, _________________________________________
1996 1995 1994 1993 1992 1991
____________ ______ ______ ______ ______ ______
<S> <C> <C> <C> <C> <C> <C>
Earnings, as defined*:
Income from continuing operations
before income taxes $89.2 $186.6 $122.2 $ 82.9 $ 99.8 $120.4
Add:
Fixed charges 34.9 54.5 48.6 59.5 63.2 67.7
Equity losses of less than 50%
owned persons - - - - 0.9 0.5
Minority interest 1.8 1.3 1 0.6 0.1 2.0
_____ _____ _____ _____ _____ _____
Total earnings $125.9 $242.4 $171.8 $143.0 $164.0 $190.6
_____ _____ _____ _____ _____ _____
_____ _____ _____ _____ _____ _____
Fixed charges:
Interest $ 30.6 $ 42.3 $34.7 $ 44.3 $ 52.1 $ 55.0
Interest portion of
rental expense 4.3 12.2 13.9 15.2 11.1 12.7
____ ____ ____ _____ _____ ____
Total fixed charges $ 34.9 $ 54.5 $48.6 $ 59.5 $ 63.2 $ 67.7
____ ____ ____ _____ _____ ____
____ ____ ____ _____ _____ ____
Ratio of earnings to fixed charges 3.6 4.4 3.5 2.4 2.6 2.8
____ ____ ____ _____ _____ ____
____ ____ ____ _____ _____ ____
<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 PACIFIC
TELECOM, INC. FORM 10-Q FOR SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
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0
0
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