UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1993
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 19334 [Fee Required]
For the transition period from to
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Commission File Number 0-1245
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CONTEL OF CALIFORNIA, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-1789511
- ----------------------------------------- ---------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16071 Mojave Drive, Victorville, California 92392
- -------------------------------------------------- ---------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 619-245-0511
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
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Securities registered pursuant to Section 12(g) of the Act:
NONE
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(TITLE OF CLASS)
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO
THIS FORM 10-K. X
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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
--- ---
THE COMPANY HAD 2,503,667 SHARES OF $5 PAR VALUE COMMON STOCK OUTSTANDING AT
FEBRUARY 28, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1993
(INCORPORATED IN PARTS I AND II).
TABLE OF CONTENTS
ITEM PAGE
- ---- ----
PART I
1. Business 1
2. Properties 4
3. Legal Proceedings 4
4. Submission of Matters to a Vote of Security Holders 4
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters 5
6. Selected Financial Data 5
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
8. Financial Statements and Supplementary Data 5
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 5
PART III
10. Directors and Executive Officers of the Registrant 6
11. Executive Compensation 8
12. Security Ownership of Certain Beneficial Owners and
Management 10
13. Certain Relationships and Related Transactions 11
PART IV
14. Exhibits, Financial Statement Schedules and Reports 12
on Form 8-K
PART I
Item 1. Business
Contel of California, Inc. (the Company) is a wholly-owned subsidiary of Contel
Corporation (the Parent Company), a wholly-owned subsidiary of GTE Corporation
(GTE), and provides communications services in California, Nevada and Arizona.
The Company was incorporated in California in 1954. Since its incorporation,
twenty-three independent telephone companies have been merged into the Company
to form the present entity.
The Company provides local telephone service within its franchise areas and
intraLATA (Local Access Transport Area) long distance service between the
Company's facilities and the facilities of other telephone companies within the
Company's LATAs. InterLATA service to other points in and out of the states in
which the Company operates is provided through connection with interexchange
(long distance) common carriers. These common carriers are charged fees
(access charges) for interconnection to the Company's local facilities. End
user business and residential customers are also charged access charges for
access to the facilities of the long distance carriers. The Company also earns
other revenues by leasing interexchange plant facilities and providing such
services as billing and collection and operator services to interexchange
carriers, primarily the American Telephone and Telegraph Company (AT&T). The
number of access lines has grown steadily from 292,103 on January 1, 1989 to
362,905 on December 31, 1993.
The Company's principal line of business is providing telecommunication
services. These services fall into five major classes: local network, network
access, long distance, equipment sales and services and other. Revenues from
each of these classes over the last three years are as follows:
Years Ended December 31
--------------------------------------
1993 1992 1991
---- ---- ----
(Thousands of Dollars)
Local Network Services $ 94,586 $ 93,752 $ 88,631
% of Total Revenues 25% 23% 23%
Network Access Services $ 139,822 $ 139,171 $ 146,577
% of Total Revenues 36% 34% 38%
Long Distance Services $ 124,780 $ 133,926 $ 126,746
% of Total Revenues 33% 32% 32%
Equipment Sales and Services $ 13,134 $ 37,220 $ 12,468
% of Total Revenues 3% 9% 3%
Other $ 12,315 $ 9,893 $ 16,282
% of Total Revenues 3% 2% 4%
At December 31, 1993, the Company had 1,592 employees. The Company has written
agreements with the Communications Workers of America (CWA) and International
Brotherhood of Electrical Workers (IBEW) covering approximately 794 of the
Company's employees. The current agreements with CWA and IBEW units expire on
September 6, 1995.
Telephone Competition
The Company holds franchises, licenses and permits adequate for the conduct of
its business in the territory which it serves.
The Company is subject to regulation by the California Public Utilities
Commission (CPUC), the Public Service Commission of Nevada, and the Arizona
Corporation Commission as to its intrastate business operations and by the
Federal Communications Commission (FCC) as to its interstate business
operations. Information regarding the Company's activities with the various
regulatory agencies and revenue arrangements with other telephone companies can
be found in Note 10 of the Company's Annual Report to Shareholders for the year
ended December 31, 1993, incorporated herein and filed as Exhibit 13.
The year was marked by important changes in the U.S. telecommunications
industry. Rapid advances in technology, together with government and industry
initiatives to eliminate certain legal and regulatory barriers are accelerating
and expanding the level of competition and opportunities available to the
Company. As a result, the Company faces increasing competition in virtually
all aspects of its business. Specialized communications companies have
constructed new systems in certain markets to bypass the local-exchange
network. Additional competition from interexchange carriers as well as
wireless companies continues to evolve for both intrastate and interstate
communications.
During 1994, the Company will begin implementation of a re-engineering plan
that will redesign and streamline processes. Implementation of its re-
engineering plan will allow the Company to continue to respond aggressively to
these competitive and regulatory developments through reduced costs, improved
service quality, competitive prices and new product offerings. Moreover,
implementation of this program will position the Company to accelerate delivery
of a full array of voice, video and data services. The re-engineering program
will be implemented over three years. During the year, the Company continued
to introduce new business and consumer services utilizing advanced technology,
offering new features and pricing options while at the same time reducing costs
and prices.
During 1993, the FCC announced its decision to auction licenses during 1994 in
51 major markets and 492 basic trading areas across the United States to
encourage the development of a new generation of wireless personal
communications services (PCS). These services will both complement and compete
with the Company's traditional wireline services. The Company will be
permitted to fully participate in the license auctions in areas outside of
GTE's existing cellular service areas. Limited participation will be permitted
in areas in which GTE has an existing cellular presence.
In Cerritos, California, GTE is testing and comparing the capabilities of
copper wire, coaxial cable and fiber optics. The Cerritos test has enhanced
GTE's expertise in the areas of pay-per-view video service, video-on demand and
local video conferencing, and led to a new interactive video service, GTE Main
Street, which allows customers to shop, bank and access various other
information services from their homes. In 1992, the FCC issued a "video
dialtone" ruling that allows telephone companies to transmit video signals over
their networks. The FCC also recommended that Congress amend the Cable Act of
1984 to permit telephone companies to supply video programming in their service
areas.
During 1993, the CPUC approved a New Regulatory Framework (NRF) settlement
agreement allowing GTE California to retain 100% of any earnings above 15.5%
beginning in 1994. Under its prior agreement, GTE California was required to
share 50% of any earnings over a 13% rate of return and refund 100% of any
earnings over 16.5%. The Company has requested that it be allowed to adopt
GTE California's NRF concurrent with the approval of the legal entity merger of
the Company and GTE California Incorporated. Additionally, the CPUC is
expected to issue a final decision in early 1994 generally authorizing
intralata toll competition and ordering significant rate restructuring in
California. Although intended to be revenue neutral, the ultimate effect on
revenue will depend, in part, on the extent to which toll and access rate
reductions result in increased calling volumes.
The GTE Consent Decree, which was issued in connection with the 1983
acquisition of GTE Sprint (since divested) and GTE Spacenet, prohibits GTE's
domestic telephone operating subsidiaries from providing long distance service
beyond the boundaries of the LATA. This prohibition restricts their direct
provision of long distance service to relatively short distances. The degree
of competition allowed in the intraLATA market is subject to state regulation.
However, regulatory constraints on intraLATA competition are gradually being
relaxed. In fact, some form of intraLATA competition is authorized in many of
the states in which the Company provides service.
In September 1993, the FCC released an order allowing competing carriers to
interconnect to the local-exchange network for the purpose of providing
switched access transport services. This ruling complements similar
interconnect arrangements for private line services ordered during 1992. The
order encourages competition for the transport of telecommunications traffic
between local exchange carriers' (LECs) switching offices and interexchange
carrier locations. In addition, the order allows LECs flexibility in pricing
competitive services.
These and other actions to eliminate the existing legal and regulatory
barriers, together with rapid advances in technology, are facilitating a
convergence of the computer, media and telecommunications industries. In
addition to allowing new forms of competition, these developments are also
creating new opportunities to develop interactive communications networks. The
Company supports these initiatives to assure greater competition in
telecommunications, provided that overall the changes allow an opportunity for
all service providers to participate equally in a competitive marketplace under
comparable conditions.
Item 2. Properties
The Company's property consists of network facilities (85%), company facilities
(12%), customer premises equipment (1%) and other (2%). From January 1, 1989
to December 31, 1993, the Company made gross property additions of $334.9
million and property retirements of $155.6 million. Substantially all of the
Company's property is subject to liens securing long-term debt. In the opinion
of management, the Company's telephone plant is substantially in good repair.
Item 3. Legal Proceedings
There are no pending legal proceedings, either for or against the Company,
which would have a material impact on the Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
Market information is omitted since the Company's common stock is wholly-owned
by Contel Corporation.
Item 6. Selected Financial Data
Reference is made to the Registrant's Annual Report to Shareholders, page 30,
for the year ended December 31, 1993, incorporated herein and filed as Exhibit
13.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to the Registrant's Annual Report to Shareholders, pages 25
to 29 for the year ended December 31, 1993, incorporated herein and filed as
Exhibit 13.
Item 8. Financial Statements and Supplementary Data
Reference is made to the Registrant's Annual Report to Shareholders, pages 2 to
23, for the year ended December 31, 1993, incorporated herein and filed as
Exhibit 13.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The names, ages and positions of all the directors and executive officers of
the Company as of March 1, 1994 are listed below along with their business
experience during the past five years.
a. Identification of Directors
Director
Name Age Since Business Experience
- -------------------- --- -------- ----------------------------------------
James F. Miles 51 1984 President of Contel of California, Inc.
since 1984; Board of Directors, Desert
Community Bank, Victorville, California;
Former President, Contel of Texas, Inc.;
Former Assistant Vice President -
Finance, Contel Western Region.
Geoffrey C. Gould 41 1990 Vice President - Regulatory and
Governmental Affairs, GTE Telephone
Operations; Former Vice President -
Merger Integration, GTE Telephone
Operations; Former President, Contel
Western Region; Former Vice President -
Quality, Contel Headquarters; Former Vice
President - Customer Services, Contel
Eastern Division Headquarters; Former
Director of Public Affairs, Contel of
Illinois.
Thomas W. White 47 1991 Executive Vice President, GTE Telephone
Operations; Director, Contel of
California, Inc.; Board Member, GTE Data
Services; Former Senior Executive Vice
President - Headquarters Staff, GTE
Telephone Operations; Former Vice
President - Products Management, GTE
Telephone Operations; and Former Vice
President - Business Development, GTE
Telephone Operations.
Directors are elected annually. The term of each director expires on the date
of the next annual meeting of shareholders, which may be held on any day during
May, as specified in the notice of the meeting.
There are no family relationships between any of the directors or executive
officers of the Company.
b. Identification of Executive Officers
Year
Assumed
Current
Name Age Position Position with Company
- ------------------------ --- -------- -----------------------------------
James F. Miles 51 1984 President
Michael W. Bollinger 43 1991 Assistant Vice President -
Controller
Michael E. Burke 49 1991 Vice President - Network Design
Jeffrey B. Cutherell 44 1991 Vice President - Regulatory and
Governmental Affairs and
Treasurer
John A. Ferrell 43 1991 Vice President - Customer Services
Each of these executive officers has been an employee of the Company or an
affiliated company for the last five years.
Except for duly elected officers and directors, no other employees had a
significant role in decision making.
All officers are appointed for a term of one year.
Item 11. Executive Compensation
Executive Compensation Tables
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the Chief
Executive Officer and each of the other four most highly compensated executive
officers of the Company for services in all capacities to the Company and its
subsidiary.
Long-Term Compensation
----------------------------------------------------
Annual Compensation Awards Payments
------------------------------------ ------------------- -------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Reserved
Name and Principal Other Annual Stock Options LTIP All Other
Position in Group Year Salary($) Bonus($) Compensation($) Awards(#) SARs(#) Payments($) Compensations($)(5)
- --------------------------- ----- --------- --------- --------------- --------- ------- ----------- -------------------
James F. Miles 1993 146,492 53,400 1,853 -- -- -- 4,387
President 1992 147,832 57,100 276 -- -- -- 7,086
1991 121,995 42,000 2,721 -- -- -- 5,089
Jeffrey B. Cutherell 1993 109,596 33,200 -- -- -- -- 3,288
Vice President - 1992 110,044 34,400 -- -- -- -- 3,301
Regulatory and 1991 98,398 24,400 957 -- -- -- 2,942
Governmental Affairs
and Treasurer (1)
John A. Ferrell 1993 105,973 33,800 8,511 -- -- -- 3,179
Vice President - 1992 105,422 31,500 283 -- -- -- 3,163
Customer Services (2) 1991 91,230 25,800 32,659 -- -- -- 2,758
Michael E. Burke 1993 108,586 11,200 201 -- -- -- 3,207
Vice President - 1992 108,897 30,000 179 -- -- -- 3,221
Network Design (3) 1991 94,675 24,500 1,694 -- -- -- 2,854
Michael W. Bollinger 1993 94,164 22,400 -- -- -- -- 621
Assistant Vice 1992 93,226 22,500 -- -- -- -- 1,857
President-Controller (4) 1991 81,396 19,000 1,053 -- -- -- 121
<FN>
- ----------
(1) Mr. Cutherell became Vice President - Regulatory and Governmental Affairs and Treasurer in May 1991.
(2) Mr. Ferrell became Vice President - Customer Services in May 1991.
(3) Mr. Burke became Vice President - Network Design in May 1991.
(4) Mr. Bollinger became Assistant Vice President - Controller in August 1991.
(5) All other compensation included Company contributions to defined contribution plans.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Value of Unexercised
Shares Number of Unexercised In-the-Money Options/SARs
Acquired Value Options/SARs at FY-End At FY-End($)
Name On Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- -------------- ----------- ----------- ------------- ----------- -------------
James F. Miles 2,500 $ 42,208 4,739 1,186 $ 60,265 $ 8,883
Jeffrey B. Cutherell 1,381 13,414 532 -- 4,485 --
John A. Ferrell 931 9,012 466 -- 3,928 --
Michael E. Burke 1,086 24,220 1,270 -- 10,706 --
Michael W. Bollinger 592 5,879 297 -- 2,504 --
Executive Agreement
Mr. Miles is covered by a Contel Executive Severance Agreement until
December 31, 1994. In order to receive a benefit, this agreement requires the
termination of the executive following a change in control of Contel
Corporation. Termination is defined as an actual or constructive termination
within twelve months following a change in control. Constructive termination
includes a reduction in pay or benefits, a demotion or a reduction in
responsibilities. The amount of severance to which he is entitled in the event
of termination following a change in control is generally equal to three times
his final average earnings as defined in Contel's Senior Executive Supplemental
Income Plan, plus all fringe benefits that were available to him immediately
prior to the change in control. There will be no deduction from the severance
payments as a result of any subsequent employment activity.
Retirement Programs
Pension Plans
The Company maintains for its full-time employees, without cost to its
employees, a trusteed defined benefit pension plan that complies with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). An
employee's normal retirement date is the first day of the month coinciding with
or next following his or her sixty-fifth birthday. Pension payments under this
defined benefit plan are based on attained age, years of credited service and
average annual earnings (regular rates of pay excluding bonuses and fringe
benefits) for the five highest consecutive years out of the last ten
consecutive years preceding retirement; however, such pension payments may not
exceed the "maximum benefit" on an annual basis under the provisions of ERISA.
The plan provides that up to $235,840 of an employee's earnings in 1993 and up
to $245,274 of an employee's earnings in 1994 may be taken into account for
purposes of determining an employee's retirement benefits under the plan.
Compensation received by current executive officers for services rendered
during 1992 that would be used in calculating future pension payments appears
in the Summary Compensation Table under the caption "Annual Compensation -
Salary". As of December 31, 1993, Messrs. Miles, Cutherell, Burke, Ferrell and
Bollinger were credited with 28, 22, 27, 21 and 20 years of service,
respectively. The following table illustrates the approximate amount of annual
pension payments that would accrue to an employee retiring in 1993 at age 65
under the provisions of the plans (such amounts are not subject to any offsets,
such as social security benefits):
Average Annual 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs.
Earnings of Svc. of Svc. of Svc. of Svc. of Svc.
- -------------- ---------- --------- ----------- ------------ ----------
$ 50,000 $ 10,125 $ 13,500 $ 16,875 $ 20,250 $ 23,625
100,000 20,729 27,638 34,548 41,457 48,367
150,000 31,604 42,138 52,672 63,207 73,742
200,000 42,479 56,638 70,797 84,957 99,117
300,000 64,229 85,638 107,048 128,457 149,867
Executive Retired Life Insurance Plan
The Executive Retired Life Insurance Plan (ERLIP) provides Messrs. Miles,
Cutherell, Burke, Ferrell and Bollinger a maximum postretirement life insurance
benefit of three times final base salary. Upon retirement, ERLIP benefits may
be paid as life insurance or optionally, an equivalent amount may be paid as a
lump sum payment equal to the present value of the life insurance amount (based
on actuarial factors and the interest rate then in effect), as an annuity or as
installment payments. If an optional payment method is selected, the ERLIP
benefit will be based on the actuarial equivalent of the present value of the
insurance amount.
There are no other compensation arrangements for directors of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners as of February 28, 1994:
Name and Shares of
Title Address of Beneficial Percent
of Class Beneficial Owner Ownership of Class
-------- -------------------- ----------- --------
Common Stock Contel Corporation 2,503,667 100%
$5 Par value One Stamford Forum shares of
Stamford, Connecticut record
06904
Cumulative Alsta & Co. 13,000 100%
Preferred c/o Continental Bank shares of
$20 par value 231 S. La Salle Street record
(1) Chicago, IL 60693
- ----------
(1) The 5.25% Series of cumulative preferred stock has full
voting rights. The number of shares of cumulative preferred
stock shown or owned includes only shares of series having
full voting rights. According to the Company's records at the
time of issuance of the fully voting preferred shares, sole
voting and investment power with respect to such shares is held by
the beneficial owner listed in the table.
(b) Security Ownership of Management as of December 31, 1993:
Common Stock of Name of Director or Nominee
GTE Corporation --------------------------- All less
James F. Miles (1) 15,178 than 1%
Geoffrey C. Gould 24,250
Thomas W. White 83,071
-------
122,499
=======
Executive Officers(1)(2)
James F. Miles 15,178
Jeffrey B. Cutherell 5,234
John A. Ferrell 2,573
Michael E. Burke 2,776
Michael W. Bollinger 586
-------
26,347
=======
All directors and executive
officers as a group(1)(2) 133,668
=======
(1) Includes shares acquired through participation in
GTE's Consolidated Employee Stock Ownership Plan and/or
the GTE Savings Plan.
(2) Included in the number of shares beneficially owned by
Messrs. Miles, Cutherell, Ferrell, Burke and Bollinger and
all directors and executive officers as a group are 5,925;
532; 466; 1,270; 297 and 9,287 shares, respectively,
which such persons have the right to acquire within 60
days pursuant to stock options.
(c) There were no changes in control of the Company during 1993.
Item 13. Certain Relationships and Related Transactions
The Company`s executive officers or directors were not materially indebted to
the Company or involved in any material transaction in which they had a direct
or indirect material interest.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements - Reference is made to the Registrant's
Annual Report to Shareholders, pages 2 - 23, for the year ended
December 31, 1993, incorporated herein and filed as Exhibit 13.
Report of Independent Public Accountants.
Consolidated Balance Sheets - December 31, 1993 and 1992.
Consolidated Statements of Income for the years ended December 31,
1993-1991.
Consolidated Statements of Reinvested Earnings for the years ended
December 31, 1993-1991.
Consolidated Statements of Cash Flows for the years ended December
31, 1993-1991.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules - Included in Part IV of this report for
the years ended December 31, 1993-1991:
Page(s)
-------
Report of Independent Public Accountants 14
Schedules:
V - Property, Plant and Equipment 15-17
VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment 18
VIII - Valuation and Qualifying Accounts 19
X - Supplementary Income Statement Information 20
- ----------
Note: Schedules other than those listed above are omitted as not applicable,
not required, or the information is included in the financial statements
or notes thereto.
(3) Exhibits - Included in this report or incorporated by reference.
2.1 Agreement of Merger, dated September 10, 1992 between GTE
California Incorporated and Contel of California, Inc.
3* Articles of Incorporation and Bylaws (incorporated by reference
from the Registration Statement of the Company, File No. 2-52487,
effective January 14, 1975).
4* Instruments defining the rights of security holders, including
indentures (incorporated by reference from the Registration
Statement of the Company, File No. 2-52487, effective January 14,
1975).
13 Annual Report to Shareholders for the year ended December 31,
1993, filed herein as Exhibit 13.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the fourth
quarter of 1993.
- ----------
* Denotes exhibits incorporated herein by reference to previous filings with
the Securities and Exchange Commission as designated.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Contel of California, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Contel of California, Inc. and
subsidiary's annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 28, 1994. Our
report on the consolidated financial statements includes an explanatory
paragraph with respect to the change in the method of accounting for income
taxes in 1992 as discussed in Note 1 to the consolidated financial statements.
Our audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed under Item 14 are the responsibility of
the Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas
January 28, 1994.
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands of Dollars)
- ------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------- -------- -------- -------- -------- --------
Balance at Retirements Other Balance at
Beginning of Additions or Sales Debits or Close of
Classification Year at Cost (Note 1) (Credits) Year
- ------------------------------------------------------------------------------------------------------------
TELEPHONE PLANT, stated at original cost:
Land $ 4,034 $ 49 $ -- $ (39) $ 4,044
Buildings 48,704 848 129 (99) 49,324
Central office equipment 291,127 42,315 25,429 61 308,074
Station connections 10,131 985 -- 18 11,134
Cable/underground conduit, etc. 420,841 21,689 3,190 (87) 439,253
Furniture and office equipment 29,329 2,244 146 1,167 32,594
Vehicles and other work equipment 17,387 1,722 2,456 338 16,991
Telephone plant under construction 17,263 (10,185) -- 59 7,137
---------- --------- --------- ---------- ----------
Total Telephone Plant 838,816 59,667 31,350 1,418 868,551
NONREGULATED PLANT 8,664 1,227 12 (2,010) 7,869
---------- --------- --------- ---------- ----------
Total Property, Plant and Equipment $ 847,480 $ 60,894 $ 31,362 $ (592) $ 876,420
========== ========== ========== ========== ==========
<FN>
- ----------------------------------
NOTE:
(1) All retirements or sales in Column D were charged to accumulated
depreciation (Schedule VI, Note 2).
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Thousands of Dollars)
- ---------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------- -------- -------- -------- -------- --------
Balance at Retirements Balance at
Beginning of Additions at or Sales Other Debits Close of
Classification Year Cost (Note 1) or (Credits) Year
- ---------------------------------------------------------------------------------------------------------------
TELEPHONE PLANT, stated at original cost:
Land $ 3,890 $ 215 $ -- $ (71) $ 4,034
Buildings 47,102 3,535 795 (1,138) 48,704
Central office equipment 278,479 29,614 16,966 -- 291,127
Station connections 8,611 1,520 -- -- 10,131
Cable/underground conduit, etc. 389,494 33,756 2,409 -- 420,841
Furniture and office equipment 26,950 3,934 -- (1,555) 29,329
Vehicles and other work equipment 15,409 2,328 (1,433) (1,783) 17,387
Telephone plant under construction 29,436 (12,154) -- (19) 17,263
---------- ---------- ---------- ---------- ----------
Total Telephone Plant 799,371 62,748 18,737 (4,566) 838,816
NONREGULATED PLANT 3,189 909 -- 4,566 8,664
---------- ---------- ---------- ---------- ----------
Total Property, Plant and Equipment $ 802,560 $ 63,657 $ 18,737 $ -- $ 847,480
========== ========== ========== ========== ==========
<FN>
- ----------------------------------
NOTE:
(1) All retirements or sales in Column D were charged to accumulated depreciation
(Schedule VI). Retirements include write-offs of customer premises equipment
due to deregulation by the FCC.
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Thousands of Dollars)
- ---------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------- -------- -------- -------- -------- --------
Balance at Retirements Balance at
Beginning of Additions at or Sales Other Debits Close of
Classification Year Cost (Note 1) or (Credits) Year
- ---------------------------------------------------------------------------------------------------------------
TELEPHONE PLANT, stated at original cost:
Land $ 3,773 $ 117 $ -- $ -- $ 3,890
Buildings 45,992 1,204 94 -- 47,102
Central office equipment 266,012 28,786 16,318 (1) 278,479
Station connections 26,869 546 18,804 -- 8,611
Cable/underground conduit, etc. 370,535 23,508 4,550 1 389,494
Furniture and office equipment 25,561 1,649 260 -- 26,950
Vehicles and other work equipment 14,341 1,702 634 -- 15,409
Telephone plant under construction 19,832 9,604 -- -- 29,436
---------- ---------- ---------- ---------- ----------
Total Telephone Plant 772,915 67,116 40,660 -- 799,371
NONREGULATED PLANT 2,556 540 -- 93 3,189
---------- ---------- ---------- ---------- ----------
Total Property, Plant and Equipment $ 775,471 $ 67,656 $ 40,660 $ 93 $ 802,560
========== ========== ========== ========== ==========
<FN>
- ------------------------------
NOTES:
(1) All retirements or sales in Column D were charged to accumulated depreciation
(Schedule VI). Retirements include write-offs of customer premises equipment
due to deregulation by the FCC.
(2) Schedule has been restated to conform to the 1992 presentation.
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
- ---------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------- -------- -------- -------- -------- --------
Additions
Charged to Other
Balance at Costs and Charges Add Balance at
Beginning of Expenses Retirements (Deduct) Close of
Classification Year (Note 1) (Note 2) (Note 3) Year
- ---------------------------------------------------------------------------------------------------------------
Accumulated depreciation and amortization
for the year ended:
December 31, 1993 $ 318,170 $ 57,776 $ 31,360 $ (1,391) $ 343,195
========== ========== ========== ========== ==========
December 31, 1992 $ 282,685 $ 52,956 $ 18,737 $ 1,266 $ 318,170
========== ========== ========== ========== ==========
December 31, 1991 $ 267,848 $ 50,762 $ 40,660 $ 4,735 $ 282,685
========== ========== ========== ========== ==========
<FN>
- ---------------------------------
NOTES:
(1) Reference is made to Note 1 of Notes to Consolidated Financial
Statements with respect to depreciation policy: 1993 1992 1991
----------- ----------- -----------
Total as shown in Consolidated Statements of Income $ 58,431 $ 53,440 $ 50,762
General office allocations (545) (312) --
Other (110) (172) --
---------- ---------- ----------
Total as shown above $ 57,776 $ 52,956 $ 50,762
========== ========== ==========
(2) Represents: Retirements or sales credited to property,
plant and equipment (Schedule V) $ 31,362 $ 18,737 $ 40,660
Other (2) -- --
---------- --------- ---------
Total as shown above $ 31,360 $ 18,737 $ 40,660
========== ========= =========
(3) Represents: Salvage $ 125 $ 2,752 $ 4,477
Removal costs (1,551) (1,486) (1,236)
Other 35 -- 1,494
---------- --------- ----------
Total as shown above $ (1,391) $ 1,266 $ 4,735
========== ========= ==========
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
- ---------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
--------- -------- ------------------------- -------- --------
Additions
-------------------------
Charged to Deductions
Balance at Other from Balance at
Beginning of Charged to Accounts Reserves Close of
Description Year Income (Note 1) (Note 2) Year
- ---------------------------------------------------------------------------------------------------------------
Allowance for uncollectible accounts for
the year ended:
December 31, 1993 $ 3,321 $ 6,478 $ 6,196 $ 12,403 $ 3,592
========== ========== ========== ========== ==========
December 31, 1992 $ 2,654 $ 8,083 $ 2,035 $ 9,451 $ 3,321
========== ========== ========== ========== ==========
December 31, 1991 $ 2,952 $ 5,871 $ 3,644 $ 9,813 $ 2,654
========== ========== ========== ========== ==========
<FN>
- ------------------------------
NOTES:
(1) Recoveries of previously written-off amounts.
(2) Charges for purpose for which reserve was created.
Represents write-offs of receivable accounts.
CONTEL OF CALIFORNIA, INC. AND SUBSIDIARY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------
Column A Column B
- -------------------------------------------- -------------------------------------------
Item Charged to Operating Expenses
- -----------------------------------------------------------------------------------------
1993 1992 1991
---------- ---------- ----------
Maintenance and repairs $ 59,794 $ 80,996 $ 64,178
========== ========== ==========
Taxes, other than payroll and income taxes,
are as follows:
Real and personal property $ 6,902 $ 7,182 $ 7,376
State gross receipts 15 12 13
Other 236 (195) 734
Portion of above taxes charged to plant
and other accounts (617) (654) (4,687)
---------- ---------- ----------
Total $ 6,536 $ 6,345 $ 3,436
========== ========== ==========
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CONTEL OF CALIFORNIA, INC.
--------------------------------------------
(Registrant)
Date March 21, 1994 By JAMES F. MILES
- ---------------------- -----------------------------------------
JAMES F. MILES
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report is signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
JAMES F. MILES President and Director March 21, 1994
- ---------------------- (Principal Executive Officer)
JAMES F. MILES
MICHAEL W. BOLLINGER Assistant Vice President- March 21, 1994
- ---------------------- Controller
MICHAEL W. BOLLINGER (Principal Financial and
Accounting Officer)
GEOFFREY C. GOULD Director March 21, 1994
- ----------------------
GEOFFREY C. GOULD
THOMAS W. WHITE Director March 21, 1994
- ----------------------
THOMAS W. WHITE