H - VEBA 3 Transfers

Appendix H

ADJUSTMENT TO PACIFIC BELL'S NOI FOR NON-TAX-DEDUCTIBLE TRANSFERS OF ASSETS FROM THE VEBA 3 PBOP TRUST TO THE VEBA 5 PBOP TRUST

Amounts in

000's

Reference

1997

1.

VEBA 3 to 5 Transfer

$13,000

Pacific Exhibit Phase 2A: 307, p. 30, Line 1

2.

Intrastate Factor

0.8043

Overland Exhibit Phase 2A: 404, Attachment 7-6

3.

Intrastate Portion

$10,456

Line 1 x Line 2

4.

Regulated Factor

0.9409

Overland Exhibit Phase 2A: 404, Attachment 7-6

5.

Intrastate Regulated

$9,838

Line 3 x Line 4

6.

Tax Factor

0.59254

(1 - .40746 (Combined Fed. And State Tax))

7.

After Tax VEBA 3 to 5 Transfer

$5,829

Line 5 x Line 6 (Note 1)

1998

8.

VEBA 3 to 5 Transfer

$79,300

Pacific Exhibit Phase 2A: 307, p. 30, Line 1

9.

Intrastate Factor

0.8043

Overland Exhibit Phase 2A: 404, Attachment 7-7

10.

Intrastate Portion

$63,781

Line 8 x Line 9

11.

Regulated Factor

0.9409

Overland Exhibit Phase 2A: 404, Attachment 7-7

12.

Intrastate Regulated

$60,012

Line 10 x Line 11

13.

Tax Factor

0.59254

(1 - .40746 (Combined Fed. And State Tax))

14.

After Tax VEBA 3 to 5 Transfer

$35,559

Line 12 x Line 13

1999 (Note 2)

15.

VEBA 3 to 5 Transfer

$89,900

Exhibit Phase 2A: 307, page 30, line 1

16.

Intrastate Factor

0.8043

Exhibit Phase 2A: 404, Attachment 7-8

17.

Intrastate Portion

$72,307

Line 15 x Line 16

18.

Regulated Factor

0.9409

Exhibit Phase 2A: 404, Attachment 7-8

19.

Intrastate Regulated

68,033

Line 17 x Line 18

20.

Tax Factor

0.59254

(1 - .40746 (Combined Fed. And State Tax))

21.

After Tax VEBA 3 to 5 Transfer

$40,312

Line 19 x Line 20

Effect of 1997 VEBA 3 Transfer on Costs in 1998

22.

Effect on Size of PBOP Reg. Asset

$5,829

Line 7 and Note 1

23.

Effect on Write-Off of PBOP Reg. Asset

$5,829

Line 7 and Note 1

Note 1: Decreasing Pacific's allowed SFAS 106 costs in 1997 by the amount of the VEBA 3 transfer during that year has the effect of increasing the size of (1) Pacific's PBOP regulatory asset in 1998 by the amount of the VEBA 3 transfer in 1997, and (2) the PBOP regulatory asset write-off in 1998 by the amount of the VEBA 3 transfer in 1997. Thus, the decrease in Pacific's allowable SFAS 106 costs in 1997 is exactly offset by an increase in the PBOP regulatory asset write-off in 1998. However, because today's decision requires the 1998 write-off to be recorded below the line, the increase in the size of the write-off caused by the VEBA 3 transfer in 1997 has no effect on NOI in 1998. Hence, the effect of the VEBA 3 transfer in 1997 on the write-off in 1998 is not included in the write-off shown in Appendices D and F.

Note 2: There is no adjustment to Pacific's NOI for VEBA 3 transfers in 1999 because of the finding reached in today's decision that the amount of PBOP costs recognized for regulatory accounting purposes in 1999 should equal Pacific's SFAS 106 accrual in 1999 regardless of Pacific's actual tax-deductible contributions. Amounts shown of 1999 are for illustrative purposes only.


Appendix H

	ADJUSTMENT TO PACIFIC BELL'S NOI FOR NON-TAX-DEDUCTIBLE TRANSFERS OF ASSETS FROM THE VEBA 3 PBOP TRUST TO THE VEBA 5 PBOP TRUST




		Amounts in
		000's	Reference

	1997

1.	VEBA 3 to 5 Transfer	$13,000	Pacific Exhibit Phase 2A: 307, p. 30, Line 1

2.	Intrastate Factor	0.8043	Overland Exhibit Phase 2A: 404, Attachment 7-6

3.	Intrastate Portion	$10,456	Line 1 x Line 2

4.	Regulated Factor	0.9409	Overland Exhibit Phase 2A: 404, Attachment 7-6

5.	Intrastate Regulated	$9,838	Line 3 x Line 4

6.	Tax Factor	0.59254	(1 - .40746 (Combined Fed. And State Tax))

7.	After Tax VEBA 3 to 5 Transfer	$5,829	Line 5 x Line 6 (Note 1)


	1998

8.	VEBA 3 to 5 Transfer	$79,300	Pacific Exhibit Phase 2A: 307, p. 30, Line 1

9.	Intrastate Factor	0.8043	Overland Exhibit Phase 2A: 404, Attachment 7-7

10.	Intrastate Portion	$63,781	Line 8 x Line 9

11.	Regulated Factor	0.9409	Overland Exhibit Phase 2A: 404, Attachment 7-7

12.	Intrastate Regulated	$60,012	Line 10 x Line 11

13.	Tax Factor	0.59254	(1 - .40746 (Combined Fed. And State Tax))

14.	After Tax VEBA 3 to 5 Transfer	$35,559	Line 12 x Line 13


	1999 (Note 2)

15.	VEBA 3 to 5 Transfer	$89,900	Exhibit Phase 2A: 307, page 30, line 1

16.	Intrastate Factor	0.8043	Exhibit Phase 2A: 404, Attachment 7-8

17.	Intrastate Portion	$72,307	Line 15 x Line 16

18.	Regulated Factor	0.9409	Exhibit Phase 2A: 404, Attachment 7-8

19.	Intrastate Regulated	68,033	Line 17 x Line 18

20.	Tax Factor	0.59254	(1 - .40746 (Combined Fed. And State Tax))

21.	After Tax VEBA 3 to 5 Transfer	$40,312	Line 19 x Line 20

	Effect of 1997 VEBA 3 Transfer on Costs in 1998

22.	Effect on Size of PBOP Reg. Asset	$5,829	Line 7 and Note 1
23.	Effect on Write-Off of PBOP Reg. Asset	$5,829	Line 7 and Note 1

Note 1: Decreasing Pacific's allowed SFAS 106 costs in 1997 by the amount of the VEBA 3 transfer during that year has the effect of increasing the size of (1) Pacific's PBOP regulatory asset in 1998 by the amount of the VEBA 3 transfer in 1997, and (2) the PBOP regulatory asset write-off in 1998 by the amount of the VEBA 3 transfer in 1997. Thus, the decrease in Pacific's allowable SFAS 106 costs in 1997 is exactly offset by an increase in the PBOP regulatory asset write-off in 1998. However, because today's decision requires the 1998 write-off to be recorded below the line, the increase in the size of the write-off caused by the VEBA 3 transfer in 1997 has no effect on NOI in 1998. Hence, the effect of the VEBA 3 transfer in 1997 on the write-off in 1998 is not included in the write-off shown in Appendices D and F.

Note 2: There is no adjustment to Pacific's NOI for VEBA 3 transfers in 1999 because of the finding reached in today's decision that the amount of PBOP costs recognized for regulatory accounting purposes in 1999 should equal Pacific's SFAS 106 accrual in 1999 regardless of Pacific's actual tax-deductible contributions. Amounts shown of 1999 are for illustrative purposes only.