7 FCC Red No. 3 Federal Communications Commission Record DA 92-99
Before the
Federal Communications Commission
Washington, D.C. 20554
needs, and which additional schedules should be consid-
ered for inclusion into ARMIS.4 After completing a fur-
ther review of the Form M. in September 1991 we re-
leased the OIC proposing that twelve additional schedules
be incorporated into ARMIS.
In the Matter of
Revision of ARMIS AAD 91-46
USOA Report
(FCC Report 43-02)
for Tier I Telephone Companies
MEMORANDUM OPINION AND ORDER
Adopted: January 21, 1992; Released: January 31, 1992
By the Chief. Common Carrier Bureau:
I. INTRODUCTION AND BACKGROUND
1. In an Order Inviting Comments (OIC).' we proposed
to revise four Form M schedules, and incorporate these
four and eight additional Form M schedules into the
Commission's Automated Reporting Management Infor-
mation System (ARMIS). Based on an analysis of the
pleadings received in this proceeding. we have decided to
adopt the proposals in our OIC with some modifications,
as discussed in the succeeding paragraphs. In order to
allow adequate time for preparation of these reports. the
due date for the 1991 submittal is hereby extended to 90
days after publication of a summary of this Order in the
Federal Register.
2. Form M is a paper report comprised of 45 schedules
which contain financial, corporate. and statistical data.
Communications common carriers having annual operat-
ing revenues in excess of $100 million must file this
report annually. ARMIS is an automated report which
contains financial and statistical data required by the
Commission to administer its accounting, joint cost, ju-
risdictional separations. rate base. and access charge rules.
ARMIS consists of nine reports2 and is filed by all Tier 1
local exchange carriers.3
3. When the Commission established ARMIS in 1987.
two Form M schedules, the balance sheet and income
statement, were incorporated into ARMIS. The Commis-
sion also directed the Common Carrier Bureau to review
the Form M to determine which schedules were no long-
er necessary. which schedules required revision, which
new schedules must he added to satisfy our data collection
Revision of ARMIS USOA Report (FCC Report 43-02) for
Tier I Telephone Companies, Order Inviting Comments, DA
91-1113 released September 4, 1991.2
The nine ARMIS Reports are: the Quarterly Report (43-01);
the USOA Report (43-02): the Joint Cost Report (43-03); the
Access Report (43-04): the Quarterly Service Quality Report
(43-05); the Semi-Annual Service Quality Report (43-06): the
Infrastructure Report (43-07): the Forecast Report (495-A); and
the Actual Usage Report (495-B).
Tier I carriers are defined as those companies having more
than $100 million in total company regulated revenues. Com-
mission Requirements for Cost Support Material to be filed with
Access Tariff on March 1, 1985, Public Notice. Mimeo No. 2133,
released January 25, 1985.
II. SUMMARY OF PROPOSAL
4. The twelve Form M schedules5 selected for
incorporation into ARMIS contain information pertaining
to the statement of cash flows, investments in affiliated
companies, transactions between affiliates, deferred in-
come taxes, pension costs and statistical data. In the OIC,
we proposed to incorporate these schedules into ARMIS
because automation would allow us to accumulate, check,
analyze, and publish the data in a more timely and effi-
cient manner.
5. We proposed to revise four of these schedules. We
proposed to revise Form M Schedule 1-3. General Services
and Licenses, by expanding the information collected to
cover all services provided by affiliates to the reporting
company; by including information on services sold by a
carrier to its affiliates; and by including information on
whether the prices of services are based on tariffed rates,
prevailing prices or fully distributed costs. We proposed to
revise Schedule B-3c. Analysis of Assets Purchased from
or Sold to Affiliates, by including information on whether
the transactions were recorded at cost, fair market value,
tariffed rates, or prevailing prices: and by eliminating
account number and accumulated depreciation informa-
tion. We also proposed to modify Form M Schedules S-2
and S-3 by providing additional information about the
technology and service characteristics of carrier access
lines.
6. In the OIC we sought comments on the proposed
ARMIS tables, the proposed instructions to each table.
including the definitions to the statistical tables, anti sug-
gestions for other Form M schedules which may lend
themselves to automation anti inclusion in the ARMIS
reporting system. Finally, to avoid unnecessary work by
carriers that are required It) file both Form M and
ARMIS reports. we proposed that they provide paper
copies of ARMIS tables with their Form M filings in lieu
of the corresponding Form M schedules.
Reporting Requirements for Certain Class A and Tier 1
Telephone Companies (Parts 31. 43. 67 and 69 of the FCC's
Rules) CC Docket No. 86- 182, 2 FCC Rcd 5771) (1987), modified
on recon.,3 FCC Rcd 6375 (1988) (released October 14, 1988).
The specific Form M schedules we proposed to include in the
ARMIS USOA Report were: 0-2, Statement of Cash Flows;
B-3a, Investments in Affiliated Companies; B-3b, Investments in
Affiliated Companies - Cost Method and Nonaffiliated Com-
panies; B-3c, Analysis of Assets Purchased from or Sold to
Affiliates; B-il, Net Deferred Operating Income Taxes; B-12,
Net Deferred Nonoperating Income Faxes; 1-3, General Services
and Licenses; 1-4, Pension Cost; S-I, Outside Plant Statistics:
S-2, Switched Access Lines in Service by Technology; S-3, Ac-
cess Lines in Service by Customer; and S-4, Telephone Calls.
1083
DA 92-99 Federal Communications Commission Record 7 FCC Red No. 3
7. Interested parties were invited to file comments on or
before October 4, 1991. Reply comments were due on or
before October 21, 1991. Comments were received from
thirteen parties and reply comments from six parties.t'
III. COMMENTS AND DISCUSSION
A. Automation of Twelve Form M Schedules
8. All of the commenting parties generally support the
proposal to automate and incorporate the twelve Form M
schedules into ARMIS. They agree that the Commission's
efforts to automate these schedules will provide an effec-
tive and efficient way to collect and analyze data, thereby
conserving time and resources for both the Commission
and the carriers. Because of the benefits we believe will
result from the automation of these schedules we will
adopt our proposal and incorporate these twelve Form M
schedules into ARMIS. Some of the commenting parties
do not agree. however, as to the amount of information
needed on the new ARMIS tables and the timetable for
filing the new ARMIS tables with the Commission. Sev-
eral of these parties recommended changes to the OlC
proposal to alleviate the reporting burden, to make the
new ARMIS tables more useful, and to facilitate access to
the ARMIS data. These recommendations and other con-
cerns raised by commenting parties are addressed in the
succeeding paragraphs.
B. Operational Statistics
9. USTA and several of the carriers oppose our pro-
posal to incorporate statistical data into FCC Report
43-02. USTA states that financial data and statistical data
should be segregated into different reports. It states that
requiring separate reports would enhance accountability
because it would allow carriers to more easily designate
appropriate officers to certify the validity of the data.t The
Pacific Companies generally support separate reports for
statistical and financial data; however, they state that there
is value in including certain statistical data with the finan-
cial reports.
10. We see merit in having the carriers provide the
statistical and financial data in separate reports, because
we believe this will aid the Commission and others in
collecting and analyzing the data. In addition, we agree
with the carriers that this may improve the officer cer-
tification process. Therefore, we will adopt this recom-
mendation and create a separate ARMIS Report (FCC
Report 43-08, Operating Data) for the statistical data.
11. The Michigan staff requests that the statistical data
report be changed to require carriers to report the num-
ber of multi-party lines in service. We understand Michi-
gan's concerns about multi-party lines, inasmuch as some
carriers may still have a substantial number in service.
The reports under consideration here, however, are for
very large carriers (i.e.. those with annual revenues of
Sl00 million or more). For these carriers, fewer than .6%
of their lines are multi-party, and this figure is declining.9
Therefore, we see no need to expand these reporting
requirements to include multi-party lines.
C. Statement of Cash Flows
12. USTA. Bell Atlantic, and BellSouth request that the
Commission allow the substitution of the cash flow state-
ment contained in the SEC Form 10-K in lieu of the
Statement of Cash Flows proposed in FCC Report 43-02.
Table III. They claim that the minor differences in the
reports do not justify the time and resources necessary to
complete the proposed Table III. USTA states that, if the
Bureau insists that the Statement of Cash Flows he sub-
mitted, the reporting carriers should be permitted to pop-
ulate it using the SEC Form 10-K data.
13. We will not adopt USTA's suggestion that we
replace the Statement of Cash Flows proposed in FCC
Report 43.02 with the SEC Form 10-K Statement of Cash
Flows. The Statement of Cash Flows is one of the basic
financial statements which, together with the Balance
Sheet and Income Statement, make up a complete set of
financial statements. The balance sheets and income state-
ments filed in ARMIS are prepared at the operating tele-
phone company level following the accounting
requirements prescribed in the USOA. The Statements of
Cash Flows filed in SEC Form 10-K. on the other hand.
are prepared at the holding company level and reflect
accounting used for financial reporting that may depart
from the USOA. Thus, cash flow statements based on
SEC Form 10-K data would not match the ARMIS bal-
ance sheets and income statements. Moreover, the SEC
Form 10-K Statement of Cash Flows would most likely
not be uniform in format and presentation which would
inhibit our ability to do computerized edit checks and
compilations of the data, which would defeat the purpose
of automation. Accordingly. we require that carriers file a
statement of cash flows at the operating company level
following the USOA accounting. as proposed.
D. Affiliate Transactions Tables
14. USTA and SNET oppose our proposal to require
reporting of affiliate transaction sales volumes categorized
by how they were priced (e.g.. cost or tariff). They argue
that the Bureau did not adequately justify the need for
this data'° and that, in any case, similar data are already
provided in the Cost Allocation Manuals (CAMs).° We
disagree with both USTA and SNET. Our affiliate transac-
tion rules'2 specify the pricing techniques that carriers are
allowed to use and the conditions under which each of
these techniques can be applied. The information we are
requesting is essential for our determination of whether
the carriers are following these rules. Currently, these
data are gathered during our audits of carriers. We have
reviewed our audit program and determined that the rou-
tine reporting of these data would improve the efficiency
of this program, by enhancing our ability to compare and
contrast the carriers' data and thereby helping us to focus
Appendix A lists the parties filing comments and reply
comments as well as the abbreviations this Order uses to iden-
tify the parties to this proceeding.
BellSouth comments at p. 3; USWC comments at p. 6;
United comments at p. 1, n. 1; SWBT comments at p. 3; GTE
comments at p. 1; Bell Atlantic comments at p. 3; the Pacific
Companies comments at p. 5: and USTA comments at p. 3.
USTA comments at pp. 3 and 4.
See USTA ex parte submission dated December 19, 1991.tO
SNET comments at p. 2.
USTA reply comments at p. 5.12
7 C.F.R. §32.27 and §64.902.
1084
DA 92-99 Federal Communications Commission Record 7 FCC Red No. 3
G. Extension of Filing Dates
22. In the OIC we stated that we intended to incor-
porate the new ARMIS tables into the USOA Report in
time for the carriers' 1991 annual submissions, scheduled
to be filed on April 1, 1992. USTA and the commenting
carriers state that an extension of the filing date for the
FCC Report 43-02 is required because of the large num-
ber of Form M schedules being automated and the short
time available to implement the required changes.
These parties request that the 1991 Form M and FCC
Report 43-02 he due 120 days after the issuance of a final
Order including the data specifications or on May 1.
1992, whichever is later.24 These parties also request that
the effective date of proposed new Tables V and V125 he
deferred for one year until the filing of calendar year
1992 reports in April 19932 because of the significant
effort needed to track and assemble the information for
these tables.27 Finally, these parties request that the filing
date for Form M be extended from the current March 31
due date to 120 days after the issuance of this Order and
the associated data specifications and that the Form M
filing date be changed to coincide with the April 1 filing
date of the FCC Report 43-02. MCI does not oppose an
extension of the filing date for the revised Report 4302.28
23. We will require the carriers to file FCC Report
43-02 and FCC Report 43-08 90 days after publication of
a summary of this Order in the Federal Register.29 We
believe that this provides sufficient time for the carriers to
prepare and file these reports.
24. We do not agree with GTE's suggestion that filing
tables which include new data elements he deferred until
April 1993. Such a deferral would result in incomplete
ARMIS filings for both FCC Reports 43-02 and 43-08. We
believe that the collection of the additional information
on affiliate transactions is necessary for monitoring car-
riers' compliance with the Commission's affiliate transac-
tion rules. The additional data elements are integral parts
of the information concerning the carriers' affiliate trans-
actions and their exclusion would not provide us with a
complete and meaningful picture of these activities be-
tween affiliates. Furthermore, only the requirement to
report these data in an automated format is new; the
existence of these data are already required by the Com-
mission's Joint Cost Order3° which established rules for
recording the transfer of assets and the provision of ser-
vices between carriers and their affiliates. 31 Since the
information we are requesting should already be available
for the independent CAM, audits, it needs only to be
automated. In addition to facilitating the collection of this
information for the annual CAM audit, the automation of
the affiliate transaction data will provide the information
to the Commission from all reporting carriers at the same
time. Therefore, we are not granting a deferral for the
reporting of data in Tables V and VI.
25. We agree with those commenters who requested an
extension of time to file the Form M for 1991 and who
asked that we make the Form M filing date coincide with
the filing date of the FCC Reports 43-02 and 43-08. Since
we are allowing carriers that file both Form M and
ARMIS reports to file paper Reports 43-02 and 43-08 in
lieu of the corresponding Form M schedules to avoid
redundant reporting, it is important that the filing dates
of Form M and the Reports 43-02 and 43-08 coincide.
Therefore, we are granting a waiver for the 1991 Form M
to be filed on the same date that the FCC Reports 43-02
and 43-08 are due. that is. 90 days after publication of a
summary of this Order in the Federal Register. The Bu-
reau will recommend to the Commission that it revise the
rules so that these filing dates will coincide in the future.
H. Requirement for Alascom to File ARMIS Reports
26. GCI states that Alascom. Inc. (Alascom) should be
required to file ARMIS reports. It claims that Alascom is
the only dominant Tier 1 carrier that does not file
ARMIS reports with the Commission. GCI acknowledges
that Alascom does file Form M reports. but states that
because the Form M does not provide jurisdictionally
separated data, it is not useful in evaluating many of the
issues that are before the Federal-State Joint Board. MCI
agrees with GCI that the Bureau should require Alascom
to file ARMIS reports.
27. GCI's proposal to require that Alascom file ARMIS
reports is clearly outside the scope of this proceeding and
we will therefore deny it. Alascom is still required to file
Form M, however, and it must do so consistent with the
changes in the Form M schedules adopted in this order.
State Access to FCC Report 43-02 Data
28. The Michigan staff contends that the usefulness of
FCC Report 43-02 to state regulators will be greatly im-
proved if the Commission makes it accessible on an on-
line. dial-up basis. Michigan states that it is willing to
work with the FCC Staff and other parties to make Michi-
gan's Electronic Mail and Bulletin Board Service avail-
able for this purpose.32
29. We agree with Michigan that the usefulness of data
is enhanced by increased accessibility. With this objective
in mind, the Bureau has developed a PC-based bulletin
board system. with electronic mail capability, known as
MCI's request goes beyond the requirements of our Part 32
USOA, and MCI has not convinced us that these requirements
need to be changed.23
USTA comments at pp. 5-9; Bell Atlantic comments at pp. 1
and 2; BellSouth comments at p. 2; the Pacific Companies
comments at pp. 2-5; SNET comments at p. 2; SWBT comments
at p. 2; United comments at pp. 2 and 3; USWC comments at p.
9; and GTE comments at pp. 3-6.24
Bell Atlantic requests that the new automated tables not be
required until June 1, 1992. Bell Atlantic comments at pp. 1 and
2.25 Table V is entitled "Analysis of Assets Purchased From or
Sold To Affiliates;" and Table VI is entitled "Analysis of Ser-
vices Purchased From or Sold To Affiliates."26
USTA comments at p. 7; Bell Atlantic comments at p. 2;
GTE comments at p. 4; the Pacific Companies comments at p. 5;
SWBT comments at p. 4; SNET comments at p. 5; and United
comments at p. 2.27
GTE requests that all automated tables requiring new data
elements be due in April 1993. GIE comments at p. 4.28
MCI reply comments at p. 3.29
Appendices D and E include the data specifications.30
Separation of Costs and regulated Telephone Service from
Costs of Nonregulated Activities, Report and Order, 2 FCC Rcd
1298 (1987), recon., 2 FCC Rcd 6283 (1987), further recon., 3
FCC 6701 (1988), aff'd subnom. Southwestern Bell Corp. v.
FCC, 896 F.2d 1378 (D.C. Cir. 1990).31
7 C.F.R. §32.27.32
The Michigan Staff comments at p. I.
1086
7 FCC Red No. 3 Federal Communications Commission Record DA 92-99
our audits on areas which are most questionable. Finally,
contrary to USTA's contention, the carriers' CAMs do not
contain sales volumes of affiliate transactions.
15. In our review of our audit program we have also
determined that it is not necessary, at this time, to require
carriers to routinely report affiliate transactions data by
transaction, transaction type. or account, as suggested by
several parties.13 We believe we can adequately focus our
audit efforts without this additional information. How-
ever, once we undertake an audit or investigation we may
require this detailed information. Therefore, carriers are
advised that they must maintain this information so that it
can be provided, in a timely manner, upon request. Of
course, the states remain free to require the reporting of
any additional information which they need for state reg-
ulatory purposes.
16. USTA and USWC suggest that the reporting thresh-
old for Tables V and VI be set at $100,000 for each
affiliate. They believe this requirement will provide some
relief from the reporting of insignificant transactions and
will ensure that the Commission receives relevant in-
formation.'4 USTA states that the $100,000 threshold is
consistent with the current threshold established by the
Commission for reporting services provided to affiliates
on Schedule 1-3 and other Form M schedules.15 We agree
with USTA that a $100,000 threshold is adequate for our
purposes at this time. Therefore, we will revise Tables V
and VI to require reporting for each affiliate with whom
the carriers purchased or sold assets or services of
$100,000 or more.
E. Redundant Reports
17. GTE proposes that the Commission reduce redun-
dant reporting requirements by eliminating data that are
already available in existing ARMIS reports) GTE be-
lieves that the requirement to file the same data under
two different report headings. ARMIS and Form M, and
in two different media, paper and diskette, is an unreason-
able burden. USTA claims that requiring paper copies of
the ARMIS report is burdensome and costly. USTA states
that the inclusion in the Form M of a paper copy of the
financial schedules incorporated in the ARMIS Report
43-02 may be useful, but that, once all the necessary
schedules have been incorporated in ARMIS. Form M
reporting should be eliminated for the Tier 1 LECs. MCI
agrees with the elimination of redundant reporting re-
quirements but believes that the Bureau should not elimi-
nate any reporting requirements without first publishing
its proposal for comment!'
18. We are sensitive to the concerns expressed by the
carriers that we should not establish reporting require-
ments that place an undue burden on them. However, we
' Michigan at p. 1: Iowa at pp. 2 and 3: and MCI at pp. 2 and
3.14
USTA comments at p. 12 and Appendix B: USWC com-
ments at p. 4.
Instruction 2 of Schedule 1-3, General Services and Licenses,
requires the companies to enter in column (a). the name of the
affiliate to whom respondents paid $100,000 or more for services
received under a license agreement, a general service contract,
or other arrangement providing for the furnishing of general
accounting, engineering, financial, legal, patent and other gen-
eral services.16
GTE comments at p. 7.
believe that the printing and copying efforts associated
with providing paper copies of data comprise only a
minor share of the total reporting costs. As a result, we do
not believe that requiring an extra copy of these data
constitutes an undue burden on the carriers. Moreover,
paper filings of these reports are necessary because the
data must be made available in a format and media
appropriate for public use. Much of the public does not
have access to computer equipment necessary to extract
data from the computer readable media used in ARMIS
filings, i.e., diskettes. Moreover, the FCC does not have
the necessary equipment to allow the public access.
Therefore, we will require the carriers to file a paper copy
of FCC Reports 43-02 and 43-08 in the Form M.
19. We will not adopt GTE's suggestion that we avoid
redundancy by eliminating statistical data which are avail-
able in other ARMIS reports. We are well aware of the
statistical data currently required in other ARMIS reports.
However, not all the ARMIS reports are filed by the same
carriers, filed at the same time, or used for the same
purpose. For example, the Infrastructure Report (43-07) is
filed only by mandatory price cap companies; it is filed at
the study area level: it is not filed until June 30; and it is
designed specifically to monitor price cap regulation. In
our continuing study of which Form M schedules are
suitable for inclusion in ARMIS, we will eliminate redun-
dant data reporting requirements to the extent practical.
Finally, as suggested by MCI. we intend to continue our
practice of seeking public comment on proposals to elimi-
nate reporting requirements!'
F. Study Area Level Reporting on FCC Report 43-02
20. MCI states that it supports the modernization of
FCC Report 43-02 but believes that this report should be
supplied on a study area basis (i.e., by state)!' The LECs
disagree. arguing that this report was designed to provide
company-wide data and not study area data.2°
21. The LECs are correct that FCC Report 43-02 was
designed to contain company-wide data. This report con-
tains company level reporting for every account in the
Uniform System of Accounts!1 including those accounts
for which study area disaggregation would serve no regu-
latory purpose. For example. we see no reason to assign
the various long-term debt accounts by study area since
the carriers do not issue debt by state. The data for
monitoring requested by MCI are available in other
ARMIS reports. The FCC Reports 43-01, 43-03 and 43-04
are available by study area and are the appropriate reports
for monitoring as suggested by MCI. Therefore, we will
not expand the FCC Report 43-02 to include study area
data. 2
17 MCI reply comments at p. 3.
8 We will not address USTA's recommendation to eliminate
the monthly operating and expense reports (MR-I, MR-4 and
MR-5) in this Order since it is outside the scope of the instant
roceeding.
MCI comments at p. 5.20
SWBT reply comments at p. 2: USTA reply comments at
8 and 9 footnote 25.
47 C.F.R. Part 32.22
We also do not agree with MCI's request that FCC Report
43-02 be modified to capture the net prorated allocation of
corporate expenses and investments between affiliated LECs.
1085
DA 92-99 Federal Communications Commission Record 7 FCC Red No. 3
7. Interested parties were invited to file comments on or
before October 4, 1991. Reply comments were due on or
before October 21, 1991. Comments were received from
thirteen parties and reply comments from six parties.'
III. COMMENTS AND DISCUSSION
A. Automation of Twelve Form M Schedules
8. All of the commenting parties generally support the
proposal to automate and incorporate the twelve Form M
schedules into ARMIS. They agree that the Commission's
efforts to automate these schedules will provide an effec-
tive and efficient way to collect and analyze data, thereby
conserving time and resources for both the Commission
and the carriers. Because of the benefits we believe will
result from the automation of these schedules we will
adopt our proposal and incorporate these twelve Form M
schedules into ARMIS. Some of the commenting parties
do not agree, however, as to the amount of information
needed on the new ARMIS tables and the timetable for
filing the new ARMIS tables with the Commission. Sev-
eral of these parties recommended changes to the OIC
proposal to alleviate the reporting burden, to make the
new ARMIS tables more useful, and to facilitate access to
the ARMIS data. These recommendations and other con-
cerns raised by commenting parties are addressed in the
succeeding paragraphs.
B. Operational Statistics
9. USTA and several of the carriers oppose our pro-
posal to incorporate statistical data into FCC Report
43-02. USTA states that financial data and statistical data
should be segregated into different reports. It states that
requiring separate reports would enhance accountability
because it would allow carriers to more easily designate
appropriate officers to certify the validity of the data.9 The
Pacific Companies generally support separate reports for
statistical and financial data; however, they state that there
is value in including certain statistical data with the finan-
cial reports.
10. We see merit in having the carriers provide the
statistical and financial data in separate reports, because
we believe this will aid the Commission and others in
collecting and analyzing the data. In addition, we agree
with the carriers that this may improve the officer cer-
tification process. Therefore, we will adopt this recom-
mendation and create a separate ARMIS Report (FCC
Report 43-08, Operating Data) for the statistical data.
11. The Michigan staff requests that the statistical data
report be changed to require carriers to report the num-
ber of multi-party lines in service. We understand Michi-
gan's concerns about multi-party lines, inasmuch as some
carriers may still have a substantial number in service.
The reports under consideration here, however, are for
very large carriers (i.e.. those with annual revenues of
$100 million or more). For these carriers, fewer than .6%
of their lines are multi-party, and this figure is declining.9
Therefore, we see no need to expand these reporting
requirements to include multi-party lines.
C. Statement of Cash Flows
12. USTA, Bell Atlantic, and BellSouth request that the
Commission allow the substitution of the cash flow state-
ment contained in the SEC Form 10-K in lieu of the
Statement of Cash Flows proposed in FCC Report 43-02,
Table III. They claim that the minor differences in the
reports do not justify the timeand resources necessary to
complete the proposed Table III. USTA states that, if the
Bureau insists that the Statement of Cash Flows be sub-
mitted, the reporting carriers should be permitted to pop-
ulate it using the SEC Form 10-K data.
13. We will not adopt USTA's suggestion that we
replace the Statement of Cash Flows proposed in FCC
Report 43.02 with the SEC Form 10-K Statement of Cash
Flows. The Statement of Cash Flows is one of the basic
financial statements which, together with the Balance
Sheet and Income Statement, make up a complete set of
financial statements. The balance sheets and income state-
ments filed in ARMIS are prepared at the operating tele-
phone company level following the accounting
requirements prescribed in the USOA. The Statements of
Cash Flows filed in SEC Form 10-K. on the other hand,
are prepared at the holding company level and reflect
accounting used for financial reporting that may depart
from the USOA. Thus, cash flow statements based on
SEC Form 10-K data would not match the ARMIS bal-
ance sheets and income statements. Moreover, the SEC
Form 10-K Statement of Cash Flows would most likely
not be uniform in format and presentation which would
inhibit our ability to do computerized edit checks and
compilations of the data, which would defeat the purpose
of automation. Accordingly. we require that carriers file a
statement of cash flows at the operating company level
following the USOA accounting. as proposed.
D. Affiliate Transactions Tables
14. USTA and SNET oppose our proposal to require
reporting of affiliate transaction sales volumes categorized
by how they were priced (e.g.. cost or tariff). They argue
that the Bureau did not adequately justify the need for
this data'° and that, in any case, similar data are already
provided in the Cost Allocation Manuals (CAMs).t' We
disagree with both USTA and SNET. Our affiliate transac-
tion rules'2 specify the pricing techniques that carriers are
allowed to use and the conditions under which each of
these techniques can be applied. The information we are
requesting is essential for our determination of whether
the carriers are following these rules. Currently, these
data are gathered during our audits of carriers. We have
reviewed our audit program and determined that the rou-
tine reporting of these data would improve the efficiency
of this program, by enhancing our ability to compare and
contrast the carriers' data and thereby helping us to focus
Appendix A lists the parties filing comments and reply
comments as well as the abbreviations this Order uses to iden-
tify the parties to this proceeding.
BellSouth comments at p. 3; USWC comments at p. h;
United comments at p. 1, n.l; SWBT comments at p. 3; GTE
comments at p. 1; Bell Atlantic comments at p. 3; the Pacific
Companies comments at p. 5; and USTA comments at p. 3.
USTA comments at pp. 3 and 4.
See USTA ex parte submission dated December 19, 1991.
SNET comments at p. 2."
USTA reply comments at p. 5.12
C.F.R. §32.27 and §64.902.
1084