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DUFF & PHELPS CREDIT RATING CO. REAFFIRMS RATINGS OF PACIFIC BELL

 CHICAGO, Jan. 7 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has reaffirmed the ratings of Pacific Bell's notes and debentures at "AA" (Double-A) and the ratings of the company's commercial paper at Duff 1+ (One-Plus).
 Pacific Bell today announced that it will book a $1.1 billion after-tax restructuring charge in the fourth quarter of 1993 related to plans to implement a major reengineering and downsizing effort, accelerate recognition of the embedded post-retirement benefit costs (FAS 106) for those employees that leave the company under the force reduction plan, and to adopt FAS 112 mandating accrual accounting for post-employment benefits. The company plans to eliminate 10,000 positions over the next four years. A reserve of $576 million after-tax is being set up to cover the incremental expenses related to the separation, training, consolidation, and relocation of operations and employees during this time frame. The remaining $496 million of the charge recognizes the expenses related to post-employment and post-retirement benefit costs.
 The net impact of these charges will be to modestly lower Pacific Bell's cash flow in 1994, but by 1995, the savings from the workforce downsizing and process reengineering will more than offset the cash expenses related to the consolidation of facilities and jobs. The reengineering and downsizing effort will help to drive down Pacific Bell's costs, making the company better able to withstand the competitive challenges that it will face in the future. These cost cuts will be particularly important if the California regulatory authorities open the market to greater competition, as is currently expected.
 Pacific Bell is the second largest local telecommunications company in the United States serving 14.4 million lines in California. Roughly 35 percent of the access lines are in Los Angeles and vicinity and another 25 percent of lines are in San Francisco and surrounding areas.
 -0- 1/7/94
 /CONTACT: James J. Stork, CFA, 312-368-3125, Duff & Phelps Credit Rating Co./


CO: Pacific Bell ST: California IN: TLS SU: RTG

LG -- NY037 -- 0179 01/07/94 13:18 EST
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Publication:PR Newswire
Date:Jan 7, 1994
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