SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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
_____________________________________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
_______________ ___________________
Commission file number 1-3531
_____________________________________________
The United Telephone Company of Pennsylvania
______________________________________________________________________
(Exact name of registrant as specified in its charter)
Pennsylvania
_____________________________________________________________
(State or other jurisdiction of incorporation or organization)
23-1175870
___________________________________
(I.R.S. Employer Identification No.)
1201 Walnut Bottom Road, Carlisle, Pennsylvania 17013
______________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 717/245-6312
____________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
The registrant meets the conditions set forth in General
Instruction J(1) (a) and (b) of Form 10-K and is therefore filing this
form with the reduced disclosure format.
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 by check mark if disclosure of deliquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not be
contained to the best of the 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 ].
There is no voting stock held by non-affiliates. There are 877,990
shares of Common Stock, $50 par value, outstanding at the end of the
fiscal year and at the date of filing of this report.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
Securities and Exchange Commission
Annual Report Form 10-K
Page Reference
Part I
Item 1. Business I-1-I-5
Item 2. Properties I-5-I-6
Item 3. Legal Proceedings I-6
Item 4. Submission of Matters to a Vote of
Security Holders I-6
Part II
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters II-1
Item 6. Selected Financial Data II-1
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations II-2-II-6
Item 8. Consolidated Financial Statements II-7-II-28
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure II-29
Part III
Item 10. Omitted under provisions of General
Instruction J III-1
Item 11. Omitted under provisions of General
Instruction J III-1
Item 12. Omitted under provisions of General
Instruction J III-1
Item 13. Omitted under provisions of General
Instruction J III-1
Part IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K IV-1-IV-10
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
Securities and Exchange Commission
Form 10-K, Part I, December 31, 1993
____________________________________
Item 1. Business
______
The United Telephone Company of Pennsylvania (Company), a
wholly-owned subsidiary of Sprint Corporation (Sprint), was originally
incorporated December 28, 1915, as Cumberland Valley Telephone Company
of Pennsylvania. On May 4, 1931, the name of the corporation was
changed to The United Telephone Company of Pennsylvania. The Company is
engaged in the business of furnishing regulated and nonregulated
communications services, mainly local, intraLATA long-distance and
interexchange carrier access. The Company serves a 5,847 square mile
territory which accounts for 12.9 percent of the geographic area of the
Commonwealth of Pennsylvania. All or parts of 25 counties are included
in the service territory. Local economies are characterized by a
variety of manufacturing and commercial businesses, agricultural and
educational enterprises. No other company furnishes local telephone
service in any of the 92 exchanges served by the Company.
The Company furnishes local and intraLATA long-distance
telephone service between points within its own territory almost
entirely by means of its own facilities. All of the Company's
telephones have direct distance dialing capability. Microwave relay
techniques, digital carrier systems and fiber optic cables are used to
provide nearly all of its long-distance transmission facilities. To
date, 84.4 percent of the Company's central offices are digital switches
with installed digital lines exceeding 338,000. In addition to
furnishing local service, the Company's central offices and toll
facilities are connected with other local exchange carriers (LECs) and
with the nationwide long-distance networks of interexchange carriers,
primarily American Telephone & Telegraph (AT&T), MCI Communications
Corporation and Sprint. Toll calls may thus be made to any telephone
connected to the worldwide interexchange network.
The Company is subject to the jurisdiction of the
Pennsylvania Public Utility Commission (Commission), pursuant to the
Pennsylvania Public Utility Code, as amended, which confers upon the
Commission broad powers of supervision and regulation over public
utilities with respect to services and facilities, rates and charges,
the issuance of securities and various other matters.
I-1
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part I
In June 1993, the Pennsylvania General Assembly enacted
legislation authorizing the Commission to sanction alternatives to
traditional rate base/rate of return regulation in Pennsylvania. LECs
may now petition the Commission for approval of price cap regulation,
services to be declared competitive and a network modernization
schedule. If LECs do not petition the Commission for alternative
regulation within five years, the Commission may compel them to justify
why they have not filed a petition. The key policy objectives of this
legislation are to encourage accelerated deployment of a universally
available broadband network by the year 2015 and to strengthen and
enhance consumer safeguards in a telecommunications environment which is
growing increasingly competitive.
The Company is also subject to the jurisdiction of the
Federal Communications Commission (FCC) with respect to the charges and
services for interstate communications services which it provides
through connection with interexchange carriers. The FCC prescribes a
uniform system of accounts for telephone companies which has been
adopted by the Commission.
The consolidated financial statements contained herein
reflect the combined operations of the Company, United Telephone Long
Distance, Inc. (UTLD) and Joint Underground Locating Services, Inc.
(JULS). UTLD was created to lease long-distance services and resell
those services to customers in equal access areas. JULS was created to
provide underground facility locating services to utilities and
contractors engaged in excavation activities in areas containing
underground utility plant.
In 1991, the Company began site construction on the five
Cellular Rural Service Area licenses that it either wholly owns or
partially owns through partnerships. All of the sites began operations
by the end of 1992. The Company is utilizing the services of an
affiliate to operate the sites.
The Company is continuing to convert its central offices to
digital technology. Approximately 95 percent of the Company's access
lines are digital. During 1993, the expansion of exchanges in which
I-2
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part I
Local Measured Service (LMS) is offered as an option to flat rate local
service increased to a total of 77 exchanges, up from 70 in 1992. The
LMS rate is 60 percent of the individual flat rate access line service
plus a nominal rate based on the time duration of each call.
Revenues from telecommunications services constitute 87.8
percent of 1993 total operating revenues of the Company. During 1993,
32.2 percent of total operating revenues were derived from local
service, 35.4 percent from network access service, 20.2 percent from
long-distance service, and the remaining 12.2 percent from miscellaneous
services.
The following is a summary of the Company's business and
residential access lines and long-distance messages originated for the
five year period from 1989 to 1993.
Years Ended December 31,
________________________
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
Access Lines:
Business 65,000 61,000 59,000 56,000 52,000
Residential 259,000 254,000 249,000 245,000 240,000
_______ _______ _______ _______ _______
Total 324,000 315,000 308,000 301,000 292,000
======= ======= ======= ======= =======
Long-distance messages
originated (expressed
in thousands) 170,611 169,152 148,330 138,985 124,403
At December 31, 1993 the Company had 1548 employees of which
82 were union-affiliated.
I-3
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part I
Compliance with federal, state and local laws and regulations
relating to the protection of the environment has had no significant
effects upon capital expenditures or earnings of the Company, and future
effects are not expected to be material.
In a Report and Order adopted March 1, 1985 and released
March 19, 1985 in CC-Docket No. 78-72, Phase III, the FCC promulgated
the requirements and guidelines for implementation of equal access by
independent telephone companies. End offices, equipped with stored
program controlled switches, must be converted to offer exchange access
services that are equal in type and quality to that offered to AT&T
within three years of the receipt of a reasonable request for equal
access services from any interexchange carrier. If no reasonable
request is made, end offices should be converted as soon as practical,
according to a scheduled implementation which reflects the capital
constraints of the operating company, the market, and other business
conditions in the area served by the end office. The Company is
offering equal access to interexchange carriers through its Bedford,
Butler, Carlisle, Chambersburg, and Newport access tandems, including
the majority of their remote switching units. By the end of 1994, the
Company plans to offer equal access to approximately 90 percent of its
available single-party access lines through additional central office
conversions. The Company began offering public paystation equal access
in 1990 and by the end of 1994 plans to offer equal access to 94 percent
of public paystations.
The potential for more direct competition with LECs is
increasing. Several states, including Pennsylvania (effective
January 1, 1987), have authorized competitive entry into the intraLATA
toll service market. State regulators are also increasingly confronted
with requests to permit resale of local exchange services, with such
resale now existing in Pennsylvania. At the interstate level, the FCC
has revised its rules to permit connection of customer-owned coin
telephones to the local network, exposing LECs to direct coin telephone
competition in many states. Additionally, the FCC has assisted
Competitive Access Providers (CAPs) in providing access to interexchange
carriers and end users by mandating that all Tier 1 LECs (including the
Company) allow collocation of CAP equipment in LEC central offices. The
FCC's decision regarding collocation is under appeal to the U.S. Court
of Appeals for the D.C. circuit.
I-4
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part I
In October 1992, the FCC adopted a new rate structure and new
pricing rules for LEC-provided switched transport. The Company filed
new access transport tariffs with the FCC in September 1993. The new
local transport structure was designed by the FCC mandate to be a
revenue neutral filing for each LEC. The new rates went into effect on
December 30, 1993.
While barriers to competition are increasingly being lowered,
the ultimate impact of competition will continue to depend, to a
considerable degree, on future FCC and state regulatory actions, court
decisions and possible federal or state legislation. Legislation
designed to stimulate local competition between local exchange service
providers and cable programming service providers, in both markets, is
presently pending in both houses of the U.S. Congress.
Effective January 1, 1991, the FCC adopted a price caps
regulatory format for the Regional Bell Operating Companies and the GTE
Corporation LECs. Other LECs could volunteer to become subject to the
price caps regulation. Under price caps, prices for access service must
be adjusted annually to reflect industry average productivity gains (as
specified by the FCC), inflation and certain allowed cost changes. The
Company elected to be subject to price caps regulation and under the
form of the plan adopted, the Company has an opportunity to earn up to a
15.25 percent rate of return on investment.
Item 2. Properties
______
The properties of the Company consist principally of land,
structures, facilities and equipment in good operating condition.
Substantially all of the telephone properties are subject to the liens
of the indentures securing the Company's first mortgage bonds. All
central offices, the Customer Service Center and the Corporate Center
are located on premises owned by the Company.
I-5
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part I
Of the Company's investment in telephone plant in service as
of December 31, 1993, aerial cable and wire supported on poles and
underground cable, both buried and in conduit, located on and under
public streets, highways and private property represented approximately
48.3 percent; central office equipment, 35.1 percent; land and
buildings, 6.2 percent; and other telephone plant, 10.4 percent.
The following table shows gross additions and retirements of
properties of the Company during the five-year period ended December 31,
1993 (in thousands):
Gross
Year Additions Retirements
____ ________ ___________
1993 $45,081 $21,728
1992 45,803 28,876
1991 41,427 44,957
1990 40,286 12,857
1989 44,811 25,371
Item 3. Legal Proceedings
______
No material legal proceedings are pending to which the
Company or any of its subsidiaries is a party or of which any of their
property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
______
No matter was submitted to a vote of security holders during
the fourth quarter of 1993.
I-6
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Item 5. Market for the Registrant's Common Stock and Related Security
______ Holder Matters
The Company is a wholly-owned subsidiary of Sprint and
consequently its common stock is not traded.
Item 6. Selected Financial Data
______
The following selected financial data for the five-year
period ended December 31, 1993 has been derived from the Company's
consolidated financial statements (in thousands):
1993 1992 1991 1990 1989
____ ____ ____ ____ ____
Operating revenues $223,408 $205,670 $192,083 $187,138 $179,385
Net income (1) $ 17,976 $ 21,352 $ 22,603 $ 24,421 $ 19,875
Total assets $395,519 $377,045 $358,000 $344,333 $343,495
Long-term debt (2) $106,521 $111,794 $ 85,223 $ 89,447 $ 92,682
(1) During 1993, nonrecurring charges of $6,537,000 were recorded
representing the portion of the costs atributable to the Company
associated with the merger of Sprint and Centel Corporation. Such
charges reduced 1993 net income by $4,135,000. In addition,
extraordinary losses on early extinguishments of debt were recorded
in 1993 and 1992, which reduced net income by $501,000 and
$509,000, respectively.
(2) Excludes current maturities
Earnings and dividends per common share information has been
omitted because the Company is a wholly-owned subsidiary of Sprint.
II-1
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Item 7. Management's Discussion and Analysis of Financial Condition
______ and Results of Operations
Recent Development - Sprint/Centel Merger
_________________________________________
Effective March 9, 1993, Sprint consummated its merger with
Centel Corporation, a telecommunications company with local exchange and
cellular/wireless communications services operations (see Note 2 of
"Notes to Consolidated Financial Statements" for additional
information). The transaction costs associated with the merger
(consisting primarily of investment banking and legal fees) and the
estimated expenses of integrating and restructuring the operations of
the two companies (consisting primarily of employee severance and
relocation expenses and costs of eliminating duplicative facilities)
resulted in a nonrecurring charge to Sprint during 1993. The portion of
such charge attributable to the Company was $6,537,000, which reduced
1993 net income by approximately $4,135,000.
Liquidity and Capital Resources
_______________________________
The Company requires only limited amounts of working capital
due to the nature of its cash flows. Demand for telephone services is
relatively stable. Stable revenues, in turn, lead to stable cash flows
into the Company. In addition, the Company has some flexibility in
determining construction spending. The ability to generate cash from
operations is a good measure of liquidity for the Company.
The Company's net cash provided by operating activities
increased $3,978,000 during 1993 from 1992 levels. The 1993 increase is
largely attributable to improved operating results, excluding the
effects of the merger and integration costs and non-cash expenses
(depreciation and deferred income taxes), and increased payroll related
accrued liabilities. These increases in cash flows were partially
offset by payments made related to the integration of Sprint and Centel.
II-2
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Net cash used by investing activities increased $369,000 for
1993 in comparison to 1992. The 1993 increase in net cash used by
investing activities was attributable to activity in cellular site
operations. Actual expenditures for property, plant and equipment were
$45,081,000 in 1993, $45,803,000 in 1992 and $41,427,000 in 1991. The
Company's planned construction expenditures for 1994 are $42,768,000 for
the improvement and upgrading of facilities. It is anticipated that
cash required to meet construction expenditures in 1994 will primarily
be provided by operating activities as it was in 1993, 1992 and 1991.
Net cash used in financing activities increased $3,124,000 in
1993 in comparison to 1992. The increase in 1993 is largely
attributable to increased long-term debt retirements, reduced proceeds
from long-term debt borrowings, and the repurchase of preferred stock,
and is partially offset by an increase in advances from the parent
company.
The primary source of external financing has been through the
issuance of debt. In 1993, the Company issued $15,000,000 of 5.76
percent Series Z First Mortgage Bonds maturing on June 1, 1998 and
$17,000,000 of 6.89 percent Series AA First Mortgage Bonds maturing on
June 1, 2008. The proceeds were used to reduce short-term advances from
Sprint which had been used to redeem higher cost long-term debt and for
general corporate purposes. During 1993, the Company redeemed its
Series N 6.25 percent, Series O 6.625 percent, Series U 7.625 percent,
and Series W 8.45 percent First Mortgage Bonds. The amount required for
these redemptions totaled approximately $35,946,000, including principal
of $34,490,000, accrued interest of approximately $590,000 and
redemption premiums of approximately $866,000. The short-term debt
outstanding during 1993 consisted of average daily advances outstanding
of $9,470,000 from Sprint, while in 1992 the average daily advances
outstanding were $25,708,000. The Company meets its short-term
financing needs through advances from Sprint. At December 31, 1993,
advances from Sprint of $9,823,000 were outstanding compared to
$2,200,000 at December 31, 1992. In addition, at December 31, 1993, the
Company has an unused line of credit, shared with an affiliate, of
$2,000,000.
II-3
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
At year-end, the Company's ratio of common stockholder's
equity to total capital was 56.2 percent in 1993 and 54.9 percent in
1992. The long-term debt to total capital ratio was 40.2 percent in
1993 and 43.1 percent in 1992.
Results of Operations
_____________________
Operating revenues are classified as local service, network
access, long-distance network and miscellaneous. Local service revenues
result primarily from providing local telephone exchange services.
Network access revenues are derived from billing other carriers and
telephone customers for their use of the local network to complete
long-distance calls when this service is not provided directly by the
Company. Long-distance network revenues are derived principally from
providing long-distance services within designated areas. Miscellaneous
revenues include revenues related to providing billing and collection
services for interexchange long-distance carriers, network facilities
leases, directory revenues and sales of telecommunications equipment.
The increases in 1993 local service revenues are primarily
due to access line growth resulting in a residential, business and
ABC/Centrex flat rate revenue increase of $1,659,000. Also contributing
to the increases were increased revenues associated with extended area
service, nonregulated business and E911 emergency services, and
increased sales of custom calling features.
The increases in network access revenues are primarily the
result of increased minutes-of-use generating increased revenues of
$4,152,000, increased revenues from settlements of $2,828,000, increased
revenues of $1,547,000 resulting from the interstate common tariff
between the Company and an affiliate to allocate common line and
switched access revenues, and increased revenues for operator transfer,
800 data base, line identification data base and interexchange leases.
The increases are partially offset by decreases in revenues associated
with National Exchange Carrier Association long-term support payments.
II-4
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Miscellaneous revenues increased in 1993 primarily due to
increases in revenues from nonregulated sales of structural wire of
$2,486,000, large private branch exchanges of $1,058,000, data
communications equipment of $558,000 and key systems of $229,000.
The increase in 1993 customer operations expense is primarily
the result of increased sales and advertising expenses of $2,004,000.
Increases in business office operations, billing services and directory
printing and distribution also contributed to the increase.
Corporate operations expense increases in 1993 resulted
primarily from increased costs of $1,216,000 associated with extended
area service, corporate advertising of $499,000, administrative costs of
$498,000, and increased other departmental costs.
In addition to the increases discussed above, plant expense,
customer operations expense and corporate operations expense also
increased as a result of higher postretirement benefits costs due to the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
The incremental cost associated with this change in accounting principle
was approximately $4,010,000.
Nonrecurring merger, integration and restructuring costs,
recognized in 1993, were $6,537,000. Included in this amount is
$1,686,000 for workforce reduction as part of an ongoing plan to reduce
the Company's labor costs.
The increase in other operating expenses in 1993 is the
result of the increased cost of equipment sales of $3,707,000, due to
higher sales volumes.
The increase in interest on long-term debt in 1993 results
from timing differences related to the retirement and refinancing of
first mortgage bonds. These timing differences in 1992 were maintained
by additional short-term debt, resulting in less interest being paid for
long-term debt. The decrease in other interest in 1993 is the result of
lower average balances in short-term debt.
II-5
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Effects of Inflation
__________________
The effects of inflation on the operations of the Company
were not significant during 1993, 1992 or 1991.
Recent Accounting Developments
______________________________
Effective January 1, 1994, the Company will adopt SFAS No.
112, "Employers' Accounting for Postemployment Benefits" (see Note 1 of
"Notes to Consolidated Financial Statements" for additional
information).
Consistent with most local exchange carriers, the Company
accounts for the economic effects of regulation pursuant to SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation". The
application of SFAS No. 71 requires the accounting recognition of the
rate actions of regulators where appropriate, including the recognition
of depreciation and amortization based on estimated useful lives
prescribed by regulatory commissions rather than those which might be
utilized by non-regulated enterprises. The Company's management
believes that the Company's operations meet the criteria for the
continued application of the provisions of SFAS No. 71. With increasing
competition and the changing nature of regulation in the
telecommunications industry, the ongoing applicability of SFAS No. 71
must, however, be constantly monitored and evaluated. Should the
Company no longer qualify for the application of the provisions of SFAS
No. 71 at some future date, the accounting impact could result in the
recognition of a material, extraordinary, non-cash charge.
II-6
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Item 8. Consolidated Financial Statements and Supplementary Data
______
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
__________________________________________
Page Reference
______________
Report of Independent Auditors II-8
Consolidated Balance Sheets at December 31, 1993 II-9 - II-10
and 1992
Consolidated Statements of Income for each of the three
years ended December 31, 1993 II-11
Consolidated Statements of Retained Earnings for each II-12
of the three years ended December 31, 1993
Consolidated Statements of Cash Flows for each of the
three years ended December 31, 1993 II-13
Notes to Consolidated Financial Statements II-14 - II-28
II-7
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
1993 FORM 10-K/PART II
REPORT OF INDEPENDENT AUDITORS
______________________________
Board of Directors and Stockholders
The United Telephone Company of Pennsylvania
We have audited the accompanying consolidated balance sheets
of The United Telephone Company of Pennsylvania, a wholly-owned
subsidiary of Sprint Corporation, as of December 31, 1993 and 1992, and
the related consolidated statements of income, retained earnings, and
cash flows for each of the three years in the period ended December 31,
1993. Our audits also included the financial statement schedules listed
in the Index at Item 14(a)2. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of The United Telephone Company of
Pennsylvania at December 31, 1993 and 1992, and the consolidated results
of its operations and its cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in Note 1 to the consolidated financial
statements, the United Telephone Company of Pennsylvania changed its
method of accounting for postretirement benefits in 1993.
ERNST & YOUNG
Kansas City, Missouri
January 21, 1994
II-8
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
CONSOLIDATED BALANCE SHEETS
(In Thousands)
ASSETS
December 31,
1993 1992
____ ____
CURRENT ASSETS
Cash $ 130 $ 357
Receivables
Customer and other, net of allowance
for doubtful accounts of $850
($380 in 1992) 19,772 16,927
Unbilled toll revenue 5,672 5,543
Interexchange carriers 7,346 5,777
Affiliated companies 2,912 2,923
Inventories 5,361 4,077
Prepayments 1,428 1,277
Deferred income taxes 3,699 2,467
________ ________
46,320 39,348
PROPERTY, PLANT AND EQUIPMENT
Land and buildings 35,785 33,455
Telephone network equipment and
outside plant 482,923 463,124
Other 60,179 58,134
Construction in progress 4,077 4,898
________ ________
582,964 559,611
Less accumulated depreciation 257,033 237,772
________ ________
325,931 321,839
DEFERRED CHARGES AND OTHER ASSETS 23,268 15,858
________ ________
$395,519 $377,045
======== ========
See Notes to Consolidated Financial Statements.
II-9
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1993 1992
____ ____
CURRENT LIABILITIES
Outstanding checks in excess of
cash balances $ 2,741 $ 1,868
Current maturities of long-term debt 3,281 2,282
Advances from parent company 9,823 2,200
Accounts payable:
Interexchange carriers 6,485 6,599
Affiliated companies 2,975 2,975
Other 6,288 6,693
Advance billings 3,475 2,833
Accrued merger, integration and
restructuring costs 2,913 -
Accrued taxes 3,207 2,267
Accrued vacation pay 4,262 4,146
Other 6,135 5,324
________ ________
51,585 37,187
LONG-TERM DEBT 106,521 111,794
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 54,536 54,133
Deferred investment tax credits 4,617 6,275
Regulatory liability 16,336 16,103
Other 8,389 3,152
________ ________
83,878 79,663
COMMITMENTS
COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY
Preferred stock, authorized and issued -
30,000 shares, Series A 4 1/2%,
par value $100 per share 3,000 3,000
Treasury stock, 30,000 preferred shares,
at par value (3,000) -
Common stock, authorized, issued and
outstanding - 877,990 shares,
par value $50 per share 43,899 43,899
Capital in excess of par value 6,658 6,658
Retained earnings 102,978 94,844
________ ________
153,535 148,401
________ ________
$395,519 $377,045
======== ========
See Notes to Consolidated Financial Statements.
II-10
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
Years Ended December 31,
1993 1992 1991
OPERATING REVENUES ____ ____ ____
Local service $ 71,874 $ 66,765 $ 62,715
Network access service 79,154 71,205 65,152
Long-distance network service 45,198 45,298 44,385
Miscellaneous 27,182 22,402 19,831
________ ________ _________
223,408 205,670 192,083
OPERATING EXPENSES
Plant expense 68,578 67,392 66,719
Depreciation 40,627 39,072 34,112
Customer operations 25,298 22,120 18,343
Corporate operations 26,750 23,365 19,405
Merger, integration
and restructuring costs 6,537 - -
Other operating expenses 9,288 5,271 2,839
Taxes:
Federal income:
Current 10,590 9,371 10,384
Deferred (405) 1,192 969
Deferred investment tax credits (1,659) (1,803) (1,706)
State, local and miscellaneous 10,709 10,320 10,017
________ ________ ________
196,313 176,300 161,082
OPERATING INCOME 27,095 29,370 31,001
INTEREST CHARGES
Interest on long-term debt 8,225 7,179 7,431
Other interest 626 1,245 1,088
________ ________ ________
8,851 8,424 8,519
OTHER INCOME
Interest charged to construction 91 44 61
Other, net 142 871 60
________ ________ ________
233 915 121
________ ________ ________
INCOME BEFORE EXTRAORDINARY ITEM 18,477 21,861 22,603
EXTRAORDINARY LOSSES ON EARLY
EXTINQUISHMENTS OF DEBT, NET (501) (509) -
________ ________ ________
NET INCOME $ 17,976 $ 21,352 $ 22,603
======== ======== ========
See Notes to Consolidated Financial Statements.
II-11
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(In Thousands)
Years Ended December 31,
1993 1992 1991
____ ____ ____
Balance at beginning of year $ 94,844 $ 84,163 $ 76,972
Net income 17,976 21,352 22,603
Cash dividends:
Preferred stock (135) (135) (135)
Common stock (9,617) (10,536) (15,277)
Preferred stock repurchase
premium (90) - -
________ ________ ________
Balance at end of year $102,978 $ 94,844 $ 84,163
======== ======== ========
See Notes to Consolidated Financial Statements.
II-12
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Years Ended December 31,
1993 1992 1991
____ ____ ____
OPERATING ACTIVITIES
Net income $ 17,976 $ 21,352 $ 22,603
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 40,627 39,072 34,112
Extraordinary losses on early
extinguishments of debt 866 879 -
Deferred income taxes and investment
tax credits (4,039) (2,323) (2,587)
Changes in operating assets and liabilities:
Receivables, net (4,532) (1,194) (3,165)
Inventories (1,284) 11 490
Other current assets (151) (129) (507)
Accounts payable 996 1,642 (111)
Accrued expenses and other current
liabilities 4,780 (5,078) 2,501
Noncurrent assets and liabilities, net 1,944 (1,571) (1,808)
Other, net 221 765 -
________ ________ ________
NET CASH PROVIDED BY OPERATING ACTIVITIES 57,404 53,426 51,528
INVESTING ACTIVITIES
Capital expenditures (45,081) (45,803) (41,427)
Other, net (2,332) (1,301) (1,393)
Net salvage from plant and equipment retired 362 422 (199)
________ ________ ________
NET CASH USED BY INVESTING ACTIVITIES (47,051) (46,682) (43,019)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 32,000 54,248 -
Retirements of long-term debt (37,140) (31,233) (3,516)
Increase (decrease) in advances
from parent company 7,623 (19,800) 10,500
Preferred stock repurchase (3,090) - -
Dividends paid (9,752) (10,671) (15,412)
Other (221) - -
________ ________ ________
NET CASH USED BY FINANCING ACTIVITIES (10,580) (7,456) (8,428)
________ ________ ________
INCREASE (DECREASE) IN CASH (227) (712) 81
CASH AT BEGINNING OF YEAR 357 1,069 988
________ ________ ________
CASH AT END OF YEAR $ 130 $ 357 $ 1,069
======== ======== ========
See Notes to Consolidated Financial Statements.
II-13
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. ACCOUNTING POLICIES
The United Telephone Company of Pennsylvania is engaged in the
business of providing communications services, principally local,
network access and long distance services in Pennsylvania. The
principal industries in its service area include manufacturing,
commercial, agriculture and education.
Basis of Presentation
_____________________
The accompanying consolidated financial statements include the
accounts of The United Telephone Company of Pennsylvania and its
wholly-owned subsidiaries, United Telephone Long Distance, Inc. (UTLD)
and Joint Underground Locating Services, Inc. (JULS), collectively
referred to as the "Company". All significant intercompany transactions
have been eliminated. The Company is a wholly-owned subsidiary of
Sprint Corporation (Sprint); accordingly, earnings per share information
has been omitted.
The Company accounts for the economic effects of regulation
pursuant to Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation," which
requires the accounting recognition of the rate actions of regulators
where appropriate. Such actions can provide reasonable assurance of the
existence of an asset, reduce or eliminate the value of an asset, or
impose a liability on a regulated enterprise.
Certain amounts in the accompanying consolidated financial
statements for 1992 and 1991 have been reclassified to conform to the
presentation of amounts in the 1993 consolidated financial statements.
These reclassifications had no effect on net income in either year.
Inventories
___________
Inventories consist of materials and supplies, stated at average
cost, and equipment held for resale, stated at the lower of average cost
or market. The sales inventory balances were $1,635,000 and $1,629,000
at December 31, 1993 and 1992, respectively.
Property, Plant and Equipment
_____________________________
Property, plant and equipment are recorded at cost. Retirements of
depreciable property are charged against accumulated depreciation with
no gain or loss recognized. Repairs and maintenance costs are expensed
as incurred.
II-14
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. ACCOUNTING POLICIES (continued)
Depreciation
____________
Depreciation expense is generally computed on a straight-line
basis. Depreciation rate changes granted by Pennsylvania Public Utility
Commission (PUC) resulted in additional depreciation expense in 1992 of
$3,601,000. Average annual composite depreciation rates were 7.2
percent for 1993 and 1992 and 6.5 percent for 1991.
Income Taxes
____________
Operations of the Company are included in the consolidated federal
income tax returns of Sprint. Federal income tax is calculated by the
Company on the basis of its filing a separate return.
Effective January 1, 1992, the Company changed its method of
accounting for income taxes by adopting SFAS No. 109, "Accounting for
Income Taxes," which requires an asset and liability approach to
accounting for income taxes. Under the provisions of SFAS No. 109, the
Company adjusted existing deferred income tax amounts, using current tax
rates, for the estimated future tax effects attributable to temporary
differences between the tax bases of the Company's assets and
liabilities and their reported amounts in the financial statements. The
Company's principal temporary difference results from using different
depreciable lives and methods with respect to its property, plant and
equipment for tax and financial reporting purposes.
As a result of corporate income tax rate reductions in prior years
and the previous income tax accounting standards which did not permit
accumulated deferred income tax amounts to be adjusted for subsequent
tax rate changes, adoption of SFAS No. 109 resulted in a decrease in the
amount of deferred income tax liabilities recorded. However, because
this decrease will accrue to the benefit of the Company's customers
through future telephone rates established by the Company's regulators,
this decrease in deferred income tax liabilities has been reflected as a
regulatory liability in the Company's financial statements.
Additionally, deferred income taxes were not provided in prior years in
those instances where the Company's regulators did not recognize such
deferred income taxes for ratemaking purposes. Upon adoption of SFAS
No. 109, the Company recognized deferred income tax liabilities for
those temporary differences for which deferred income taxes had not
previously been provided. Corresponding regulatory assets were also
recorded by the Company to reflect the anticipated recovery of
II-15
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. ACCOUNTING POLICIES (continued)
Income Taxes (continued)
________________________
such taxes in future telephone rates based on actions of the Company's
regulators.
Accordingly, the adoption of SFAS No. 109 had no significant effect
upon the Company's 1992 net income. As allowed by SFAS No. 109, prior
years' consolidated financial statements were not restated.
During 1991, in accordance with Accounting Principles Board Opinion
(APB) No. 11, deferred income taxes were provided for all differences in
timing of reporting income and expenses for financial statement and
income tax purposes, except for items that were not allowable by the
Federal Communications Commission (FCC) or the PUC as an expense for
rate-making purposes.
Investment tax credits (ITC) are deferred and amortized over the
useful life of the related property. The Tax Reform Act of 1986
effectively eliminated ITC after December 31, 1985.
Postretirement Benefits
_______________________
Effective January 1, 1993, the Company changed its method of
accounting for postretirement benefits (principally health care
benefits) provided to certain retirees by adopting SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
SFAS No. 106 requires accrual of the expected cost of providing
postretirement benefits to employees and their dependents or
beneficiaries during the years employees earn the benefits. As
permitted by SFAS No. 106, the Company elected to recognize the
obligation for postretirement benefits already earned by its current
retirees and active work force as of January 1, 1993 by amortizing such
obligation on a straight-line basis over a period of twenty years.
During 1992 and 1991, the Company expensed postretirement benefits
as such costs were paid.
Postemployment Benefits
_______________________
Effective January 1, 1994, the Company will adopt SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." Under the new
standard, the Company is required to recognize certain previously
unrecorded obligations for benefits provided to former or inactive
employees and their dependents, after employment but before retirement.
Postemployment benefits offered by the Company include severance,
II-16
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. ACCOUNTING POLICIES (continued)
Postemployment Benefits (continued)
_______________________
workers' compensation and disability benefits, including the
continuation of other benefits such as health care and life insurance
coverage. As required by the standard, the Company will recognize its
obligations for postemployment benefits through a cumulative adjustment
in the consolidated income statement. The resulting nonrecurring,
non-cash charge will not significantly impact the Company's 1994 net
income. Adoption of this standard is not expected to significantly
impact future operating expenses.
Interest Charged to Construction
________________________________
In accordance with the Uniform System of Accounts, as prescribed by
the FCC, interest is capitalized only on those telephone plant
construction projects for which the estimated construction period
exceeds one year.
2. MERGER, INTEGRATION AND RESTRUCTURING COSTS
Effective March 9, 1993, Sprint consummated its merger with Centel
Corporation (Centel), a telecommunications company with local exchange
and cellular/wireless communications services operations. Centel's
local exchange telephone businesses operate in six states: Florida,
North Carolina, Virginia, Illinois, Texas and Nevada. Pursuant to the
Agreement and Plan of Merger dated May 27, 1992, Sprint issued 1.37
shares of its common stock in exchange for each outstanding share of
Centel common stock.
The operations of the merged companies are being integrated and
restructured to achieve efficiencies which are expected to yield
significant operational synergies and cost savings. The transaction
costs associated with the merger and the estimated expenses of
integrating and restructuring the operations of the two companies
resulted in nonrecurring charges to Sprint during 1993. The portion of
such charges attributable to the Company was $6,537,000, which reduced
1993 net income by approximately $4,135,000.
II-17
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
3. EMPLOYEE BENEFIT PLANS
Defined Benefit Pension Plan
____________________________
Substantially all employees of the Company are covered by a
noncontributory defined benefit pension plan. For participants of the
plan represented by collective bargaining units, benefits are based upon
schedules of defined amounts as negotiated by the respective parties.
For participants not covered by collective bargaining agreements, the
plan provides pension benefits based upon years of service and
participants' compensation.
The Company's policy is to make contributions to the plan each year
equal to an actuarially determined amount consistent with applicable
federal tax regulations. The funding objective is to accumulate funds
at a relatively stable rate over the participants' working lives so that
benefits are fully funded at retirement. As of December 31, 1993, the
plan's assets consisted principally of investments in corporate equity
securities and U.S. government and corporate debt securities.
The components of the net pension credits and related assumptions
are as follows (in thousands):
1993 1992 1991
____ ____ ____
Service cost -- benefits earned
during the period $2,083 $ 1,906 $ 2,007
Interest cost on projected
benefit obligation 6,025 5,803 5,586
Actual return on plan assets (16,351) (6,162) (26,134)
Net amortization and deferral 4,805 (3,483) 17,077
_______ _______ _______
Net pension credit $(3,438) $(1,936) $(1,464)
======= ======= =======
Discount rate 8.00% 8.50% 8.50%
Expected long-term rate of return
on plan assets 9.50% 8.25% 8.25%
Anticipated composite rate of
future increases in compensation 5.50% 6.33% 7.02%
II-18
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
3. EMPLOYEE BENEFIT PLANS (continued)
Defined Benefit Pension Plan (continued)
________________________________________
The funded status and amounts recognized in the consolidated
balance sheets for the plan, as of December 31, are as follows (in
thousands):
1993 1992
____ ____
Actuarial present value of pension
benefit obligations
Vested benefit obligation $(75,058) $(64,732)
======== ========
Accumulated benefit obligation $(84,195) $(71,209)
======== ========
Projected benefit obligation $(90,770) $(77,673)
Plan assets at fair value 134,821 122,548
________ ________
Plan assets in excess of the
projected benefit obligation 44,051 44,875
Unrecognized net gains (27,535) (24,909)
Unrecognized prior service cost (882) (6,753)
Unamortized portion of transition asset (9,157) (10,174)
________ ________
Prepaid pension cost $ 6,477 $ 3,039
======== ========
The projected benefit obligations as of December 31, 1993 and 1992
were determined using a discount rate of 7.50% for 1993 and 8.00% for
1992, and anticipated composite rates of future increases in
compensation of 4.50% for 1993 and 5.50% for 1992.
Defined Contribution Plans
__________________________
Sprint sponsors two defined contribution employee savings plans
covering substantially all employees of the Company. Participants may
contribute portions of their compensation to the plans. Contributions
of participants represented by collective bargaining units are matched
by the Company based upon defined amounts as negotiated by the
respective parties. Contributions of participants not covered by
collective bargaining agreements are also matched by the Company. For
these participants, the Company provides matching contributions equal to
50 percent of participants' contributions up to 6 percent of their base
compensation and may, at the discretion of Sprint's Board of Directors,
provide additional matching contributions based upon the performance of
II-19
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
3. EMPLOYEE BENEFIT PLANS (continued)
Defined Benefit Pension Plan (continued)
________________________________________
Sprint's common stock price in comparison to other telecommunications
companies. The Company's contributions to the plans aggregated
$1,670,000, $1,182,000 and $1,215,000 in 1993, 1992 and 1991,
respectively.
Postretirement Benefits
_______________________
The Company provides other postretirement benefits (principally
health care benefits) to certain retirees. Substantially all employees
who retired from the Company before January 1, 1991 became eligible for
these postretirement benefits at reduced cost to the retirees.
Employees retiring after such date, who meet specified age and years of
service requirements, are eligible for these benefits on a shared cost
basis, with the Company's portion of the cost determined by the
retirees' years of credited service at retirement. The Company funds
the accrued costs as benefits are paid.
For regulatory purposes, the FCC permits recognition of net
postretirement benefits costs, including amortization of the transition
obligation, in accordance with SFAS No. 106.
The components of the 1993 net postretirement benefits cost are as
follows (in thousands):
Service cost -- benefits earned during the period $ 599
Interest on accumulated postretirement benefits
obligation 2,488
Amortization of transition obligation 1,593
______
Net postretirement benefits cost $4,680
======
For measurement purposes, an annual health care cost trend rate of
13 percent was assumed for 1993, gradually decreasing to 6 percent by
2001 and remaining constant thereafter. The effect of a one percent
annual increase in the assumed trend rate would have increased the 1993
net postretirement benefits cost by approximately $707,000. The
weighted average discount rate for 1993 was 8 percent.
II-20
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
3. EMPLOYEE BENEFIT PLANS (continued)
Postretirement benefits (continued)
__________________________________
The amount recognized in the consolidated balance sheet as of December
31, 1993 is as follows (in thousands):
Accumulated postretirement benefits obligation
Retirees $ 13,280
Active plan participants -- fully eligible 7,554
Active plan participants -- other 9,014
________
29,848
Unrecognized net gains 3,846
Unrecognized transition obligation (30,265)
________
Accrued postretirement benefits cost $ 3,429
========
The accumulated benefits obligation as of December 31, 1993 was
determined using a discount rate of 7.5 percent. An annual health care
cost trend rate of 12 percent was assumed for 1994, gradually decreasing
to 6 percent by 2001 and remaining constant thereafter. The effect of a
one percent annual increase in the assumed health care cost trend rate
would have increased the accumulated benefits obligations as of December
31, 1993 by approximately $4,029,000.
The cost of providing health care benefits to retirees was $958,000
and $1,104,000 in 1992 and 1991, respectively.
II-21
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
4. INCOME TAXES
The components of federal and state income tax expense are as
follows (in thousands):
1993 1992 1991
____ ____ ____
Federal income taxes
Current $10,590 $ 9,371 $10,384
Deferred (405) 1,192 969
Amortization of deferred ITC (1,659) (1,803) (1,706)
_______ _______ _______
8,526 8,760 9,647
State income taxes
Current 4,285 3,921 4,230
Deferred (1,975) (1,712) (1,850)
_______ _______ _______
2,310 2,209 2,380
_______ _______ _______
Total income tax expense $10,836 $10,969 $12,027
======= ======= =======
In 1993 and 1992, income tax benefits of $365,000 and $370,000,
respectively, associated with the extraordinary losses incurred related
to the early extinguishments of debt were reflected as reductions of
such losses in the consolidated statements of income.
The differences which cause the effective income tax rate to vary
from the statutory federal income tax rate of 35 percent in 1993 and 34
percent in 1992 and 1991 are as follows (in thousands):
1993 1992 1991
____ ____ ____
Federal income tax at the statutory rate $10,260 $11,162 $11,774
Less amortization of deferred ITC 1,659 1,803 1,706
_______ _______ _______
Expected federal income tax provision
after amortization of deferred ITC 8,601 9,359 10,068
Effect of
Differences required to be flowed through
by regulatory commissions 692 709 623
Reversal of rate differentials (863) (986) (1,036)
State income tax, net of federal income
tax effect 1,501 1,458 1,571
Other, net 905 429 801
_______ _______ _______
Income tax expense, including ITC $10,836 $10,969 $12,027
======= ======= =======
Effective income tax rate 37.0% 33.4% 34.7%
======= ======= =======
II-22
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
4. INCOME TAXES (continued)
During 1993 and 1992, in accordance with SFAS No. 109, deferred
income taxes were provided for the temporary differences between the
carrying amounts of the Company's assets and liabilities for financial
statement purposes and their tax bases. The sources of the differences
that give rise to the deferred income tax assets and liabilities as of
December 31, along with the income tax effect of each, are as follows
(in thousands):
1993 1992
____________________ ___________________
Deferred Income Tax Deferred Income Tax
____________________ ___________________
Assets Liabilities Assets Liabilities
______ ___________ _______ ___________
Property, plant and
equipment $56,412 $54,673
Allowance for
doubtful accounts $ 72 $ 101
Expense accruals 3,139 1,883
Deferred revenue 219 206
Other, net 269 (1,876) 277 (540)
______ _______ ______ _______
$3,699 $54,536 $2,467 $54,133
====== ======= ====== =======
On August 10, 1993, the Revenue Reconciliation Act of 1993 (the
Act) was enacted which, among other changes, raised the federal income
tax rate for corporations to 35 percent from 34 percent, retroactive to
the beginning of the year. Pursuant to SFAS No. 71, the resulting
adjustments to the Company's deferred income tax assets and liabilities
to reflect the revised rate have generally been reflected as reductions
to the related regulatory liabilities.
During 1991, in accordance with APB No. 11, deferred income tax
provisions resulted from the differences in the timing of recognizing
certain revenues and expenses for financial statement and income tax
purposes. The sources of the differences, along with the income tax
effect of each, were as follows (in thousands):
Excess of tax depreciation and cost of
removal over book depreciation $ 688
Revenue billed but not recognized for
accounting purposes (75)
Other (1,494)
_______
$ (881)
=======
II-23
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
5. LONG-TERM DEBT AND EXTRAORDINARY LOSSES ON EXTINGUISHMENTS
Long-term debt as of December 31, excluding current maturities, is
as follows (in thousands):
1993 1992
____ ____
Weighted
Average
Amount Interest Rate Amount
______ _____________ ______
First mortgage bonds,
maturities 1995 to 2008 $106,119 7.24% $111,270
REA mortgage notes,
maturities 1995 to 2009 402 2.00% 457
Other notes - - 67
________ ________
$106,521 $111,794
======== ========
Long-term debt to be retired during the next five years is
summarized below (in thousands):
Year Amount
____ ______
1994 $ 3,281
1995 3,860
1996 1,373
1997 1,374
1998 16,372
The first mortgage bonds and notes are secured by substantially all
of the Company's property, plant and equipment.
Under the most restricted terms of the Company's first mortgage
bond indentures, $1,736,000 of retained earnings were restricted from
payment of dividends at December 31, 1993.
As of December 31, 1993, the Company had a bank line of credit
shared with an affiliate, totaling $2,000,000; this line of credit,
which is renewable in June, 1994, is compensated under fee arrangements.
The line of credit may be withdrawn by the bank if there is a material
adverse change in the financial condition of the Company or the
affiliate. At December 31, 1993, there were no borrowings outstanding
under the arrangement.
II-24
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
5. LONG-TERM DEBT AND EXTRAORDINARY LOSSES ON EXTINGUISHMENTS
(continued)
During 1993, the Company redeemed prior to scheduled maturities
$34,490,000 of first mortgage bonds with interest rates ranging from
6.25 percent to 8.45 percent. During 1992, the Company redeemed, prior
to scheduled maturities, $25,633,000 of first mortgage bonds with
interest rates ranging from 9.375 percent to 11.25 percent. The
prepayment penalties incurred in connection with the early
extinguishments of debt and the write-off of related debt issuance
costs, net of the related income tax benefits, are reflected as
extraordinary losses in the 1993 and 1992 consolidated statements of
income.
6. PREFERRED STOCK
On September 1, 1993, all outstanding shares of the Company's
Series A, 4 1/2 percent cumulative preferred stock was called for
redemption. Pursuant to the terms of such stocks, all shares were
repurchased on or after December 1, 1993 at a price of $103 per share.
The repurchased shares of preferred stock are held in treasury as of
December 31, 1993.
7. COMMITMENTS
Gross rental expense aggregated $3,390,000 in 1993, $3,131,000 in
1992 and $2,741,000 in 1991.
The Company's planned capital expenditures for the year ending
December 31, 1994 are approximately $42,768,000. Normal purchase
commitments have been or will be made for these planned expenditures.
8. RELATED PARTY TRANSACTIONS
The Company purchases telecommunications equipment, construction
and maintenance equipment, and materials and supplies from its
affiliate, North Supply Company. Total purchases for 1993, 1992, and
1991 were $14,940,000, $16,844,000 and $13,765,000, respectively.
Under an agreement with Sprint, the Company reimburses Sprint for
data processing services, other data related costs and certain
management costs which are incurred for the Company's benefit. A credit
resulting from deferred income taxes on intercompany profits is also
allocated by Sprint to affiliated companies. Total charges to the
II-25
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
8. RELATED PARTY TRANSACTIONS (continued)
Company aggregated $17,874,000, $16,932,000 and $14,411,000 in 1993,
1992 and 1991, respectively, and the credit relating to deferred income
taxes was $150,000, $164,000 and $191,000 in 1993, 1992 and 1991,
respectively. Included in these charges are amounts reimbursed by an
affiliated company aggregating approximately $2,426,000 in 1993
$2,865,000 in 1992 and $2,967,000 in 1991 for data processing services
incurred by the Company for the benefit of the affiliate. The
Company enters into cash borrowing transactions with Sprint; generally,
interest on such transactions is computed based on the prior month's
thirty-day average commercial paper index, as published in the Federal
Reserve Statistical Release H.15, plus forty-five basis points.
Interest expense on such advances from Sprint was $345,000, $1,094,000
and $849,000 in 1993, 1992 and 1991, respectively.
Sprint Publishing & Advertising, an affiliate, pays the Company a
fee for the right to publish telephone directories in the Company's
operating territory, a listing fee, and a fee for billing and collection
services performed for Sprint Publishing & Advertising by the Company.
For 1993, 1992 and 1991, Sprint Publishing & Advertising paid the
Company a total of $4,764,000, $4,622,000 and $4,541,000, respectively.
The Company paid Sprint Publishing & Advertising $737,000,
$615,000 and $607,000 in 1993, 1992 and 1991, respectively, for its
costs of publishing the white page portion of the directories.
The Company provides various services to Sprint's long distance
communications services division, such as network access, operator and
billing and collection services, and the lease of network facilities.
The Company received $5,002,000, $4,534,000 and $3,546,000 in 1993, 1992
and 1991, respectively, for these services. The Company paid Sprint's
long distance communications services division $1,775,000, $1,559,000
and $1,656,000 in 1993, 1992 and 1991, respectively, for interexchange
telecommunications services.
The Company is reimbursed by an affiliated company for certain
salaries and other costs which are incurred by the Company for the
benefit of the affiliate. Similarly, the Company reimburses the
affiliate for certain costs incurred by the affiliate for the Company's
benefit. These reimbursements represent the cost of such items as
determined by the Company and its affiliates. Such reimbursable
charges, net of amounts reimbursed by the Company, totaled $22,309,000,
$21,548,000 and $17,809,000 in 1993, 1992 and 1991, respectively.
II-26
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
8. RELATED PARTY TRANSACTIONS (continued)
The Company and an affiliated company file a common interstate
access tariff with the FCC. As a result, the Company participates in a
pooling arrangement with its affiliate whereby each company recognizes
interstate access revenues based upon a common rate of return. Under
this arrangement, the Company recognized total interstate access
revenues of $39,872,000, $36,970,000 and $32,454,000 in 1993, 1992 and
1991, respectively.
9. ADDITIONAL FINANCIAL INFORMATION
Financial Instruments Information
_________________________________
The Company's financial instruments consist of long-term debt,
including current maturities, with carrying amounts as of December 31,
1993 and 1992 of $109,802,000 and $114,076,000, respectively, and
estimated fair values of $117,366,000 and $115,701,000, respectively.
The fair values are estimated based on quoted market prices for
publicly-traded issues, and based on the present value of estimated
future cash flows using a discount rate commensurate with the risks
involved for all other issues.
The carrying values of the Company's other financial instruments
(principally short-term borrowings) approximate fair value as of
December 31, 1993 and 1992.
Supplemental Cash Flows Information
___________________________________
The supplemental disclosures required for the consolidated
statements of cash flows for the years ended December 31, are as follows
(in thousands):
1993 1992 1991
____ ____ ____
Cash paid for
Interest, net of amounts
capitalized $ 8,981 $ 8,768 $ 8,216
Income taxes $13,413 $14,633 $14,368
II-27
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
9. ADDITIONAL FINANCIAL INFORMATION (continued)
Major Customer Information
__________________________
Operating revenues from American Telephone & Telegraph resulting
primarily from network access, billing and collection services, and the
lease of network facilities aggregated approximately $33,122,000,
$33,579,000 and $32,715,000 for 1993, 1992 and 1991, respectively.
10. SUPPLEMENTAL QUARTERLY INFORMATION - UNAUDITED
(in thousands)
1993 Quarters Ended
_______________________________________________
March 31 June 30 September 30 December 31
_______ _______ ____________ ___________
Operating revenues $52,916 $51,875 $55,025 $63,592
Operating income 3,916 7,460 7,552 8,167
Income before
extraordinary item 1,640 5,231 5,374 6,232
Net income 1,640 4,730 5,374 6,232
1992 Quarters Ended
_______________________________________________
March 31 June 30 September 30 December 31
_______ _______ ____________ ___________
Operating revenues $50,089 $49,867 $51,690 $54,024
Operating income 7,513 8,237 8,448 5,172
Income before
extraordinary item 5,288 6,046 6,470 4,057
Net income 5,288 6,046 5,961 4,057
In the first quarter of 1993, the Company recorded estimated merger
and integration costs of $6,100,000 as a result of the Sprint/Centel
Merger, which reduced net income by approximately $3,651,000. In the
fourth quarter of 1992, the Company recorded additional depreciation
expense of $4,300,000 as a result of the technical depreciation rate
filing.
II-28
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part II
Item 9. Changes in and Disagreements with Accountants on Accounting
______ and Financial Disclosure
None
II-29
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part Part III
Item 10. Directors and Executive Officers of the Registrant
_______
Omitted under the provisions of General Instruction J.
Item 11. Executive Compensation
_______
Omitted under the provisions of General Instruction J.
Item 12. Security Ownership of Certain Beneficial Owners and
_______ Management
Omitted under the provisions of General Instruction J.
Item 13. Certain Relationships and Related Transactions
_______
Omitted under the provisions of General Instruction J.
III-1
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
_______ 8-K.
(a) 1. The consolidated financial statements of the Company
filed as a part of this report are listed in the Index to
Consolidated Financial Statements on page II-7.
2. The consolidated financial statement schedules of the
Company filed as a part of this report are listed in the
Index to Consolidated Financial Statement Schedules on
page IV-2.
(b) The Registrant was not required to file a report on Form 8-K
during the last quarter of 1993.
(c) Exhibits required by Item 601 of Regulation S-K:
Exhibit No.
__________
(3) (a) Restated Articles of Incorporation (filed on
Exhibit 3-A to Registration Statement No.
2-45758 and incorporated herein by reference).
(b) Bylaws (filed as Exhibit 3-B to 1989 Form 10-K
and incorporated herein by reference).
(c) Bylaws, as amended February 25, 1993 (filed as
Exhibit 3-C to 1993 Form 10-K).
(4) (a) Indenture dated January 1, 1951 and Supplemental
Indentures First through Eighteenth (filed as
Exhibits 4-A through 4-R to Registration Statement
No. 2-45758 and Exhibit 4-A to Registration
Statement No. 2-52319 and incorporated herein by
reference).
(b) Nineteenth Supplemental Indenture (filed as
Exhibit 4-B to 1981 Form 10-K and incorporated
herein by reference).
(c) Twentieth Supplemental Indenture (filed as Exhibit
4-B to 1987 Form 10-K and incorporated herein by
reference).
(d) Twenty-first Supplemental Indenture (filed as
Exhibit 4-D to 1992 Form 10K and incorporated
herein by reference).
(e) Twenty-second Supplemental Indenture dated as of
June 1, 1993 (filed as Exhibit 4-E to 1993 Form
10K).
IV-1
<PAGE>
The United Telephone Company of Pennsylvania
Form 10-K/Part IV
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
(Item 14(a) 2.)
________________________________________________________________________
Page Reference
______________
Schedules for each of the three years ended December 31, 1993:
Schedule V - Property, Plant and Equipment-Consolidated IV-3-IV-5
Schedule VI - Accumulated Depreciation-Consolidated IV-6-IV-8
Schedule VIII - Valuation and Qualifying Accounts-Consolidated IV-9
Schedule X - Supplementary Income Information-Consolidated IV-10
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is
included in the consolidated financial statements, including the notes
thereto.
IV-2
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1993
(In Thousands)
Balance at Constructed
Beginning Additions Retirements Balance at
of Year at Cost or Sales End of Year
_________ ___________ ___________ ___________
Land and buildings $ 33,455 $ 2,749 $ 419 $ 35,785
Other general support assets 40,598 5,114 2,355 43,357
Central office assets 196,741 18,957 12,351 203,347
Information origination/
termination assets 11,572 1,915 3,031 10,456
Cable and wire facilities
assets 266,383 16,733 3,540 279,576
Amortizable assets 3,576 80 26 3,630
Telephone plant under
construction 4,898 (821) - 4,077
Non-operating plant 2,388 354 6 2,736
________ _______ _______ ________
$559,611 $45,081 $21,728 $582,964
======== ======= ======= ========
Depreciation expense is computed on a straight-line basis. The average annual
composite depreciation rate for the Company in 1993 was 7.2%.
IV-3
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1992
(In Thousands)
Balance at Constructed
Beginning Additions Retirements Balance at
of Year at Cost or Sales End of Year
_________ ___________ ___________ ___________
Land and buildings $ 32,583 $ 1,235 $ 363 $ 33,455
Other general support assets 39,210 5,055 3,667 40,598
Central office assets 192,474 20,049 15,782 196,741
Information origination/
termination assets 12,660 2,146 3,234 11,572
Cable and wire facilities
assets 252,757 17,969 4,343 266,383
Amortizable assets 3,680 235 339 3,576
Telephone plant under
construction 6,046 (1,148) - 4,898
Property held for future use 37 (37) - -
Non-operating plant 3,237 299 1,148 2,388
________ _______ _______ ________
$542,684 $45,803 $28,876 $559,611
======== ======= ======= ========
Depreciation expense is computed on a straight-line basis. The average annual
composite depreciation rate for the Company in 1992 was 7.2%.
IV-4
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1991
(In Thousands)
Balance at Constructed
Beginning Additions Retirements Balance at
of Year at Cost or Sales End of Year
_________ ___________ ___________ ___________
Land and buildings $ 31,321 $ 1,421 $ 159 $ 32,583
Other general support assets 36,229 4,853 1,872 39,210
Central office assets 184,989 17,397 9,912 192,474
Information origination/
termination assets 41,170 1,330 29,840 12,660
Cable and wire facilities
assets 239,305 16,490 3,038 252,757
Amortizable assets 3,808 8 136 3,680
Telephone plant under
construction 6,157 (111) - 6,046
Property held for future use - 37 - 37
Non-operating plant 3,235 2 - 3,237
________ _______ _______ ________
$546,214 $41,427 $44,957 $542,684
======== ======= ======= ========
Depreciation expense is computed on a straight-line basis. The average annual
composite depreciation rate for the Company in 1991 was 6.5%.
IV-5
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE VI - ACCUMULATED DEPRECIATION ON PROPERTY,
PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1993
(In Thousands)
Balance at Charged
Beginning to Depr. Net Balance at
of Year Expense Retirements Salvage End of Year
_________ _______ ___________ _______ ___________
Land and buildings $ 7,474 $ 1,284 $ 419 $(231) $ 8,108
Other general support
assets 16,362 4,324 2,355 339 18,670
Central office assets 82,683 18,375 12,351 569 89,276
Information origination/
termination assets 9,722 1,058 3,031 130 7,879
Cable and wire facilities
assets 119,889 14,778 3,540 (537) 130,590
Amortizable assets 2,494 793 26 - 3,261
Non-operating plant (852) 15 6 92 (751)
________ _______ _______ ______ ________
$237,772 $40,627 $21,728 $ 362 $257,033
======== ======= ======= ====== ========
IV-6
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE VI - ACCUMULATED DEPRECIATION ON PROPERTY,
PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1992
(In Thousands)
Balance at Charged
Beginning to Depr. Net Balance at
of Year Expense Retirements Salvage End of Year
_________ _______ ___________ _______ __________
Land and buildings $ 6,761 $ 1,218 $ 350 $(155) $ 7,474
Other general support
assets 15,624 4,025 3,667 380 16,362
Central office assets 80,024 18,135 15,782 306 82,683
Information origination/
termination assets 11,773 1,007 3,234 176 9,722
Cable and wire facilities
assets 110,691 13,990 4,343 (449) 119,889
Amortizable assets 2,142 691 339 - 2,494
Non-operating plant 126 6 1,148 164 (852)
________ _______ _______ _____ ________
$227,141 $39,072 $28,863(1) $ 422 $237,772
======== ======= ======= ===== ========
(1)Reconciliation of retirements included in Schedule V - Property,
Plant and Equipment - Consolidated:
Amount charged to reserve $28,863
Retirements of nondepreciable property 13
_______
Total Schedule V retirements $28,876
=======
IV-7
<PAGE3>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE VI - ACCUMULATED DEPRECIATION ON PROPERTY,
PLANT AND EQUIPMENT - CONSOLIDATED
Year Ended December 31, 1991
(In Thousands)
Balance at Charged
Beginning to Depr. Net Balance at
of Year Expense Retirements Salvage End of Year
_________ _______ ___________ _______ ___________
Land and buildings $ 6,674 $ 395 $ 159 $(149) $ 6,761
Other general support
assets 12,692 4,504 1,872 300 15,624
Central office assets 73,556 16,451 9,912 (71) 80,024
Information origination/
termination assets 40,507 947 29,840 159 11,773
Cable and wire facilities
assets 103,113 11,055 3,038 (439) 110,691
Amortizable assets 1,568 709 136 1 2,142
Non-operating plant 75 51 - - 126
________ _______ ______ _____ _______
$238,185 $34,112 $44,957 $(199) $227,141
======== ======= ======= ===== ========
IV-8
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS - CONSOLIDATED
Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
Additions Deductions
_________ __________
Balance at Charged Accounts
Beginning to Charged off, Net Balance at
Description of Year Expense of Collections End of Year
___________ _________ _______ ________________ ___________
Deducted from assets:
Allowance for uncollectible
accounts:
Year ended
December 31, 1993 $380 $1,451 $ 981 $850
==== ====== ====== ====
Year ended
December 31, 1992 $398 $1,021 $1,039 $380
==== ====== ====== ====
Year ended
December 31, 1991 $372 $1,230 $1,204 $398
==== ====== ====== ====
IV-9
<PAGE>
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
SCHEDULE X - SUPPLEMENTARY INCOME INFORMATION-CONSOLIDATED
Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
Year Ended December 31,
_______________________
1993 1992 1991
Taxes other than payroll and
federal and state income
taxes:
Gross receipts $4,941 $4,764 $4,250
Capital stock 2,064 2,194 2,159
Other state and local 1,392 1,153 1,228
______ ______ ______
$8,397 $8,111 $7,637
====== ====== ======
Maintenance expense is the primary component of plant expense which is
shown separately on the consolidated statements of income. The Company
had no significant advertising expense and paid no royalties during
1993, 1992 and 1991.
IV-10
<PAGE>
The United Telephone Company of Pennsylvania
1993 Form 10-K
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.
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
Date: By: /s/Richard C. Eckhart
_____________ ____________________________
Richard C. Eckhart
Vice President-Finance/
Administration and Director
Chief Financial Officer
<PAGE>
The United Telephone Company of Pennsylvania
1993 Form 10-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, this report signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Dale L. Cross Date: 03/23/94
Dale L. Cross
President and Director
Chief Executive Officer
/s/ Roy A. Wilson Date: 03/22/94
Roy A. Wilson
Vice President-Service and Director
/s/ Richard C. Eckhart Date: 03/23/94
Richard C. Eckhart
Vice President-Finance and
Administration and Director
Chief Financial Officer
/s/ James L. Walker Date: 03/22/94
James L. Walker
Controller and Chief Accounting Officer
/s/ William A. Connor Date: 03/11/94
William A. Conner - Director
/s/ Arthur A. Kurtze Date: 03/18/94
Arthur A. Kurtze - Director
/s/ R. Glen Fenstermacher Date: 03/14/94
R. Glen Fenstermacher - Director
/s/ John E. Kosar Date: 03/16/94
John E. Kosar - Director
/s/ Patricia A. McKiernan Date: 03/16/94
Patricia A. McKiernan - Director
/s/ Michael W. Rice Date: 03/10/94
Michael W. Rice - Director
EXHIBIT 3-C
BYLAWS
OF
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
ARTICLE I
CORPORATE
Section 1.1. Registered/Principal Office and Agent. The registered or
principal office of the corporation shall be at such place within this
corporation's State or Commonwealth of incorporation, and the registered
agent in that office shall be such person, as the Board of Directors may
from time to time determine and the Secretary so certifies to the
Department of State.
Section 1.2. Fiscal Year. The fiscal year of the corporation shall be
identical with the calendar year unless otherwise prescribed from time to
time by the Board of Directors.
Section 1.3. Corporate Seal. The seal of the corporation shall be circular
in form and bear the name of the corporation, the year of its organization
and the words "Corporate Seal" in combination with the corporation's state
of incorporation. The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive
substance affixed thereto. The seal on the certificates for shares or on
any corporation obligation for the payment of money may be a facsimile
engraved, printed or any other manner of reproduction.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meetings. An annual meeting of stockholders to elect
directors and transact such other business as may properly be presented to
the meeting shall be held at such place, within or without the
corporation's state of incorporation, and as of such time, prior to May 1
in each year, as the holder(s) of record of twenty percent (20%) of the
shares as specified in Section 2.2 following or the Board of Directors may
from time to time determine.
Section 2.2 Special Meetings. A special meeting of stockholders may be
called at any time by the Board of Directors, its Chairman, the Executive
Committee or the President and shall be called by any of them or by the
Secretary upon receipt of a written request to do so specifying the matter
or matters, appropriate for action at such a meeting, proposed to be
presented at the meeting and signed by holders of record of twenty percent
(20%) of the shares of stock that would be entitled to be voted on such
matter or matters if the meeting were held on the day such request is
received and the record date for such meeting were the close of business on
the preceding day. Any such meeting shall be held at such time and at such
place, within or without the corporation's state of incorporation, as shall
be determined by the body or person calling such meeting and as shall be
stated in the notice of such meetings.
Section 2.3. Notice of Meeting. For each meeting of stockholders written
notice shall be given stating the place, date and hour, and in the case of
a special meeting, the purpose or purposes for which the meeting is called
and, if the list of stockholders required by Section 2.9 is not to be at
such place at least 10 days prior to the meeting, the place where such list
will be. Except as otherwise provided by applicable law or the
corporation's Articles of Incorporation as amended, the written notice of
any meeting shall be given not less than 5 nor more than 60 days before the
date of the meeting to each stockholder entitled to vote at such meeting.
If mailed, notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as
it appears on the records of the Corporation.
Section 2.4. Quorum. Except as otherwise required by law or the Articles
of Incorporation, the holders of record of a majority of the shares of
stock entitled to be voted present in person or represented by proxy at a
meeting shall constitute a quorum for the transaction of business at the
meeting, but in the absence of a quorum the holders of record present or
represented by proxy at such meeting may vote to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum is obtained. At any such adjourned session of the meeting at
which there shall be present or represented the holders of record of the
requisite number of shares, any business may be transacted that might have
been transacted at the meeting as originally called.
Section 2.5. Chairman and Secretary of Meeting. At each meeting of
stockholders the Chairman of the Board of Directors, or in his absence the
person designated in writing by the Chairman of the Board of Directors, or
if no person is so designated or if there is no predesignated Chairman of
the Board, then the President or a person designated by the Board of
Directors or by the President, shall preside as chairman of the meeting; if
no person is so designated, then the meeting shall choose a chairman by
plurality vote. The Secretary or in his absence the Assistant Secretary or
a person designated by the chairman of the meeting shall act as secretary
of the meeting.
Section 2.6. Voting; Proxies. Except as otherwise provided by law or the
Articles of Incorporation, and subject to the provision of Section 2.10:
(a) Each stockholder shall at every meeting of the stockholders be
entitled to one vote for each share of capital stock held by him.
(b) Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act
for him by proxy.
(c) Directors shall be elected by a plurality vote.
(d) Each matter, other than election of directors, properly presented
to any meeting shall be decided by a majority of the votes cast
on the matter.
(e) Election of directors and the vote on any other matter presented
to a meeting shall be by written ballot.
Section 2.7. Adjourned Meetings. A meeting of stockholders may be
adjourned to another time or place as provided in Section 2.4. Unless the
Board of Directors fixes a new record date, stockholders of record for an
adjourned meeting shall be as originally determined for the meeting from
which the adjournment was taken. If the adjournment is for more than 30
days or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote. At the adjourned meeting any
business may be transacted that might have been transacted at the meeting
as originally called.
Section 2.8. Consent of Stockholders in Lieu of Meeting. Any action that
may be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, provided said
consent is filed with the Secretary for inclusion in the corporate record
book. Notice of the taking of such action shall be given promptly to each
stockholder that would have been entitled to vote thereon at a meeting of
stockholders and that did not consent thereto in writing.
Section 2.9. List of Stockholders Entitled to Vote. Before every meeting
of stockholders a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the addresses of each
stockholder and the number of shares registered in the name of each
stockholder, shall be prepared and shall be open to the examination of any
stockholder for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. Such list shall
be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present.
Section 2.10. Fixing of Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other action. If no record date is fixed, the
record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which the
meeting is held; the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on
which the first written consent is expressed; and the record date for any
other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
ARTICLE III
DIRECTORS
Section 3.1. Number; Term of Office; Qualifications; Vacancies. The
business and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors. The number of directors that shall
constitute the whole Board shall be determined by action of the Board of
Directors taken by the affirmative vote of a majority of the whole Board
subject to superseding action by the Stockholders. Directors shall be
elected at the annual meeting of stockholders to hold office, subject to
Sections 3.2 and 3.3 until the next annual meeting of stockholders and
until their respective successors are elected and qualified. Vacancies and
newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director, and
the directors so chosen shall hold office, subject to Sections 3.2 and 3.3,
until the next annual meeting of stockholders and until their respective
successors are elected and qualified.
Section 3.2. Resignation. Any director of the Corporation may resign at
any time by giving written notice of such resignation to the Board of
Directors, the President or the Secretary of the Corporation, or to the
Corporation itself where the above-named officers and Board are resigned,
vacated or incapacitated. Any such resignation shall take effect at the
time specified therein or, if no time be specified, upon receipt thereof by
the Board of Directors, one of the above-named officers or the Corporation
as aforesaid; and, unless specified therein, the acceptance of such
resignation shall not be necessary to make it effective. When one or more
directors shall resign from the Board of Directors effective at a future
date, a majority of the directors then in office, including those who have
so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in
these Bylaws in the filling of other vacancies.
Section 3.3 Removal. Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided, however, if
less than the entire Board is to be removed, no director may be removed
without cause if the votes cast against his removal would be sufficient to
elect him if then cumulatively voted at an election of the entire Board of
Directors.
Section 3.4. Regular and Annual Meetings; Notice. Regular meetings of the
Board of Directors shall be held at such time and at such place, within or
without the state of incorporation, as the Board of Directors may from time
to time prescribe, provided that if there is no such prescription then such
meetings shall be held pursuant to calls made in accordance with Section
3.5 following. No notice need be given of any regular meeting, and a
notice, if given, need not specify the purposes thereof. A meeting of the
Board of Directors may be held without notice immediately after an annual
meeting of stockholders at the same place as that at which such meeting was
held.
Section 3.5. Special Meetings; Notice. A special meeting of the Board of
Directors may be called at any time by the Board of Directors, its
Chairman, the Executive Committee, the President or any person acting in
the place of the President and shall be called by any one of them or by the
Secretary upon receipt of a written request to do so specifying the matter
or matters, appropriate for action at such a meeting, proposed to be
presented at the meeting and signed by at least three directors. Any such
meeting shall be held at such time and at such place, within or without the
state of incorporation, as shall be determined by the body or person
calling such meeting. Notice of such meeting stating the time and place
thereof shall be given (a) by deposit of the notice in the United States
mail, first class, postage prepaid, at least two days before the day fixed
for the meeting addressed to each director at his address as it appears on
the Corporation's records or at such other address as the director may have
furnished the Corporation for that purpose, or (b) by delivery of the
notice similarly addressed for dispatch by telegraph, cable or radio or by
delivery of the notice by telephone or in person, in each case at least 24
hours before the time fixed for the meeting.
Section 3.6. Presiding Officer and Secretary at Meetings. Each meeting of
the Board of Directors shall be presided over by the Chairman of the Board
of Directors or in his absence by the President or if neither is present by
such member of the Board of Directors as shall be chosen by the meeting.
The Secretary, or in his absence an Assistant Secretary, shall act as
secretary of the meeting, or if no such officer is present, a secretary of
the meeting shall be designated by the person presiding over the meeting.
Section 3.7. Quorum. A majority of the whole Board of Directors shall
constitute a quorum for the transaction of business, but in the absence of
a quorum a majority of those present (or if only one be present, then that
one) may adjourn the meeting, without notice other than announcement at the
meeting, until such time as a quorum is present. Except as may otherwise
be required by the Articles of Incorporation, the Bylaws or by applicable
law, the vote of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 3.8. Meeting by Telephone. Members of the Board of Directors or of
any committee thereof may participate in meetings of the Board of Directors
or of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation shall constitute
presence in person at such meeting.
Section 3.9. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all members of the Board of
Directors or of such committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the Secretary for
inclusion in the minutes of proceedings of the Board of Directors or of
such committee.
Section 3.10. Executive and Other Committees. The Board of Directors may,
by resolution adopted by a majority of the Directors in office,
establish one or more committees to consist of one or more Directors of the
Corporation. Any committee, to the extent provided in the resolution of
the Board of Directors or in the Bylaws, shall have and may exercise all of
the powers and authority of the Board of Directors except that a committee
shall not have any power or authority as to the submission to shareholders
of any action requiring approval of shareholders under 15 Pa.C.S. Section
1504(b); the creation or filling of vacancies in the Board of Directors; the
adoption, amendment or repeal of the Bylaws; the amendment or repeal of any
resolution of the Board of Directors that by its terms is amendable or
repealable only by the Board of Directors; and action on matters committed
by the Bylaws or resolution of the Board of Directors to another committee
of the Board of Directors. In the absence or disqualification of a member
of a committee, the number of members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Each such committee other than the Executive Committee shall have such name
as may be determined from time to time by the Board of Directors.
Section 3.11. Compensation. Directors shall receive compensation for their
services as directors or as members of committees or councils as may from
time to time be fixed by the Board of Directors. They may also be
reimbursed for their expenses in attending any meeting.
Section 3.12. Performance of Duties. Directors shall stand in a fiduciary
relationship to the Corporation and shall perform their duties as Directors
including duties as a member of any committee of the Board upon which they
may serve, in good faith, in a manner they reasonably believe to be in the
best interests of the Corporation, and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence would use
under similar circumstances. In performing their duties, Directors shall
be entitled to rely in good faith on information, opinions, reports or
statements, including financial statements and other financial data, in
each case prepared or presented by any of the following:
(a) One or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the
matters presented.
(b) Counsel, public accountants or other persons as to matters which
the Director reasonably believes to be within the professional or
expert competence of such person.
(c) A committee of the Board upon which the Director does not serve,
duly designated in accordance with law, as to matters within its
designated authority, which committee the Director reasonably
believes to merit confidence.
A Director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause his reliance
to be unwarranted. In discharging the duties of their respective
positions, the Board of Directors, committees of the Board, and individual
Directors may, in considering the best interest of the Corporation,
consider the effects of any action upon employees, upon suppliers and
customers of the Corporation and upon communities in which offices or other
establishments of the Corporation are located and all other pertinent
factors. Absent breach of fiduciary duty, lack of good faith or self
dealing, actions taken as a Director or any failure to take any action
shall be presumed to be in the best interests of the Corporation.
Section 3.13. Personal Liability. A Director shall not be personally
liable for monetary damages as such for any action taken, or any failure to
take any action, unless:
(a) A Director has breached or failed to perform the duties of his
office as set out in this Article III; and
(b) The breach or failure to perform constitutes self dealing,
willful misconduct or recklessness.
The provisions of this Section 3.13 shall not apply to (a) the
responsibility or liability of a Director pursuant to any criminal
statutes; or (b) the liability of a Director for the payment of taxes
pursuant to local, state or federal law.
ARTICLE IV
OFFICERS
Section 4.1. Election; Qualification. The officers of the Corporation may
be a Chairman of the Board of Directors, and shall be a President, one or
more Vice Presidents, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. The Board of Directors may elect a
Controller, one or more Assistant Secretaries, one or more Assistant
Treasurers, one or more Assistant Controllers and such other officers as it
may from time to time determine. The Chairman of the Board of Directors
and the President shall be elected from among the directors. Two or more
offices may be held by the same person except the offices of President and
Secretary.
Section 4.2. Term of Office. Each officer shall hold office from the time
of his election and qualification to the time at which his successor is
elected and qualified, unless sooner he shall die or resign or shall be
removed pursuant to Section 4.4.
Section 4.3. Resignation. Any officer of the Corporation may resign at any
time by giving written notice of such resignation to the Board of
Directors, the President or the Secretary of the Corporation or to the
Corporation itself where the above-named officers and Board are resigned,
vacated or incapacitated. Any such resignation shall take effect at the
time specified therein or, if no time be specified, upon receipt thereof by
the Board of Directors or one of the above-named officers or the
Corporation as aforesaid; and, unless specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 4.4. Removal. Any officer may be removed at any time, with or
without cause, by the vote of a majority of the whole Board of Directors.
Section 4.5. Vacancies. Any vacancy however caused in any office of the
Corporation may be filled by action of the Board of Directors.
Section 4.6. Compensation. The compensation of each officer shall be such
as the Board of Directors may from time to time determine.
Section 4.7. Chairman of the Board of Directors. The Chairman of the Board
of Directors, if a chairman is elected, may be designated by the Board as
the chief executive officer of the Corporation and if so shall have general
supervision of the affairs of the Corporation and shall perform such other
duties as the Bylaws or the Board of Directors may from time to time
prescribe.
Section 4.8. President. Unless a Chairman of the Board is elected and
designated the chief executive officer, the President shall be the chief
executive and operating officer of the Corporation and shall have general
supervision of the affairs and operations of the Corporation and shall
perform such other duties as the Bylaws or the Board of Directors may from
time to time prescribe. If a Chairman of the Board is elected and
designated the chief executive officer, then the President shall be the
chief operating officer of the Corporation and shall have general
supervision of the operations of the Corporation and shall perform such
other duties as the Bylaws or the Board of Directors may from time to time
prescribe.
Section 4.9. Vice President. Each Vice President shall have such powers
and duties as generally pertain to the office of Vice President and as the
Board of Directors, the Chairman of the Board or the President may from
time to time prescribe. During the absence of the President or his
inability to act, the Vice President, or if there shall be more than one
Vice President, then that one designated by the President or the Board of
Directors, shall exercise the powers and shall perform the duties of the
President, subject to the direction of the Board of Directors.
Section 4.10. Secretary. The Secretary shall keep the minutes of all
meetings of stockholders and of the Board of Directors. He shall be
custodian of the corporate seal and shall affix it or cause it to be
affixed to such instruments as require such seal and attest the same and
shall exercise the powers and shall perform the duties incident to the office
of Secretary, subject to the direction of the Board of Directors.
Section 4.11. Treasurer. The Treasurer shall have care of all funds and
securities of the Corporation and shall exercise the powers and shall
perform the duties incident to the office of Treasurer, subject to the
direction of the Board of Directors.
Section 4.12. Other Officers. Each other officer of the Corporation shall
exercise the powers and shall perform the duties incident to his office,
subject to the direction of the Board of Directors.
ARTICLE V
CAPITAL STOCK
Section 5.1. Stock Certificates. The interest of each holder of stock of
the Corporation shall be evidenced by a certificate or certificates in such
form as the Board of Directors may from time to time prescribe. Each
certificate shall be signed by or in the name of the Corporation by the
President or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer. If such certificate
is countersigned (1) by a transfer agent other than the Corporation or its
employee or (2) by a registrar other than the Corporation or its employee,
any other signature on the certificate may be facsimile. If any officer,
transfer agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 5.2. Transfer of Stock. Shares of stock shall be transferable on
the books of the Corporation pursuant to applicable law and such rules and
regulations as the Board of Directors shall from time to time prescribe.
Section 5.3. Holders of Record. Prior to due presentment for registration
of transfer, the Corporation may treat the holder of record of a share of
its stock as the complete owner thereof exclusively entitled to vote, to
receive notifications and otherwise entitled to all the rights and powers
of a complete owner thereof, notwithstanding notice to the contrary.
Section 5.4. Lost, Stolen, Destroyed or Mutilated Certificates. The
Corporation shall issue a new certificate of stock to replace a certificate
theretofore issued by it alleged to have been lost, destroyed or wrongfully
taken, if the owner or his legal representative (i) requests replacement
before the Corporation has notice that the stock certificate has been
acquired by a bona fide purchaser; (ii) files with the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such stock
certificate or the issuance of any such new stock certificate; and (iii)
satisfies such other terms and conditions as the Board of Directors may
from time to time prescribe.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Indemnity. (a) The Corporation shall indemnify, subject to
subsection (e), any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation), by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify, subject to subsection (e) of
this Section, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses
(including attorneys' fees) judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation.
(c) To the extent that a director, officer, employee or agent of the
Corporation, or a person serving in any other enterprise at the
request of the Corporation, has been successful on the merits or
otherwise in defense of any action, suit or proceeding or in
defense of any claim, issue or matter therein, the Corporation
shall indemnify him against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Expenses incurred by an officer, Director, employee or agent in
defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation.
(e) Indemnification under this Section shall not be made in any case
where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted
willful misconduct or recklessness.
(f) Indemnification under any bylaw, agreement, vote of shareholders,
members or Directors or otherwise, may be granted for any action
taken or any failure to take any action and may be made whether
or not the Corporation would have the power to indemnify the
person under any other provision of law except as provided in
this Section and whether or not the indemnified liability arises
or arose from any threatened, pending or completed action by or
in the right of the Corporation.
(g) The indemnification provided by this Section shall not limit the
Corporation from providing any other indemnification permitted by
law nor shall it be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
(h) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section shall, unless otherwise
provided when authorized or ratified, continue to a person who
has ceased to be a Director, officer, employee or agent and shall
inure to the benefit of the heirs, executors, and administrators
of such person.
(i) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such whether or not the Corporation would have the
power to indemnify him against such liability under the
provisions of this Section.
(j) For the purposes of this Section, references to "the Corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Section
with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its
separate existence had continued.
(k) The Corporation may create a fund of any nature, which may, but
need not be, under the control of a trustee, or otherwise secure
or insured in any manner its indemnification obligations, whether
arising under or pursuant to this Section or otherwise.
(l) The provisions of Section 1728 of the Pennsylvania Business
Corporation Law of 1988, 15 P.S. Section 1728, or corresponding
provisions of law applicable to any business corporation shall be
applicable to any bylaw, contract or transaction authorized by
the Directors under this Section.
Section 6.2. Waiver of Notice. Whenever notice is required by the
Articles of Incorporation, the Bylaws or any provision of the applicable
laws of the state of incorporation, a written waiver thereof, signed by the
person entitled to notice, whether before or after the time required for
such notice, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
ARTICLE VII
AMENDMENT OF BYLAWS
Section 7.1.Amendment. Except as otherwise provided in 15 P.S. Section 1504,
the Bylaws may be adopted, amended or repealed at any meeting of stockholders
or at any meeting of the Board of Directors by a majority vote of the whole
Board. Subsequent to the making of any changes to the Bylaws of the
Corporation by action of the Board, a copy of the Bylaws of the
Corporation, clearly marked to indicate all changes made to the Bylaws by
action of the Board since the last previous annual meeting of stockholders,
shall be prepared and shall be available for the examination of any
stockholder, during ordinary business hours, for a period of at least 10
days prior to the next annual meeting of the stockholders, either at a
place within the locality where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. Such copy of the Bylaws
shall be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present.
In addition, at any time, upon request to the Secretary of the Corporation,
any stockholder of record shall be furnished a copy of the Bylaws of the
Corporation, clearly marked to indicate all changes made to the Bylaws by
action of the Board since the last previous annual meeting of stockholders.
EXHIBIT 4-E
[CONFORMED]
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA
to
PNC BANK, NATIONAL ASSOCIATION
(SUCCESSOR BY MERGER TO PROVIDENT NATIONAL BANK),
as Trustee
Twenty-Second Supplemental Indenture
DATED AS OF
JUNE 1, 1993
SUPPLEMENTAL TO INDENTURE OF MORTGAGE
DATED AS OF JANUARY 1, 1951
First Mortgage Bonds, Series Z, 5.76% due June 1, 1998
First Mortgage Bonds, Series AA, 6.89% due June 1, 2008
TWENTY-SECOND SUPPLEMENTAL INDENTURE, dated as of the
first day of June, 1993, made by and between THE UNITED TELEPHONE
COMPANY OF PENNSYLVANIA, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania (hereinafter
called the "Company"), having its principal office and place of business
in South Middleton Township, Cumberland County, Commonwealth of
Pennsylvania, party of the first part, and PNC BANK, NATIONAL
ASSOCIATION (successor by merger to PROVIDENT NATIONAL
BANK), a national banking association organized and existing under the
laws of the United States of America, having its principal office and
place of business in the City of Pittsburgh (hereinafter called the
"Trustee"), as Trustee, party of the second part.
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture of Mortgage dated as of January 1, 1951 (hereinafter
sometimes called the "Original Indenture", the Original Indenture and
all indentures supplemental thereto being hereinafter referred to
collectively as the "Indenture"), to secure the payment of the principal of
and any premium which may be due and payable on and the interest on
all bonds at any time issued and outstanding thereunder, to declare the
terms and conditions upon which bonds are to be issued thereunder and
to provide for the creation of a series of bonds designated as "First
Mortgage Bonds, Series A, 3.10 %" (hereinafter called "Bonds of Series
A"), and the following Supplemental Indentures dated as of the
following dates to subject to the lien of the Indenture certain additional
property acquired by the Company and providing for the creation of the
following designated Series of Bonds:
Supplemental Interest
Indenture Date Series Rate
_________________ ________ ______ __________
First February 1, 1952 B 3 3/4 %
Second January 1, 1953 C 3 5/8 %
Third January 1, 1954 D 3 3/4 %
Fourth September 1, 1954 E. 3.40 %
Fifth December 1, 1955 F. 3.60 %
Sixth December 1, 1956 G 4 3/4 %
Seventh January 1, 1958 H 5 1/4 %
Eighth June 1, 1959 I 5 %
Ninth February 1, 1961 J 5 %
Tenth May 1, 1962 K 4 1/2 %
Supplemental Interest
Indenture Date Series Rate
_________________ ________ ______ __________
Eleventh November 1, 1964 L 4.65 %
Twelfth November 1, 1965 M 4.95 %
Thirteenth November 1, 1966 N 6 1/4 %
Fourteenth November 1, 1968 O 6 5/8 %
Fifteenth June 1, 1970 P 9 3/4 %
Sixteenth July 1, 1972 Q 4 1/2 %
Sixteenth July 1, 1972 R 9 3/8 %
Sixteenth July 1, 1972 S 10 1/4 %
Sixteenth July 1, 1972 T 4.95 %
Seventeenth October 1, 1972 U 7 5/8 %
Eighteenth December 1, 1974 V 10 1/4 %
Nineteenth December 1, 1977 W 8.45 %
Twentieth April 1, 1987 X 8.75 %
Twenty-First December 1, 1992 Y 7.375 %
WHEREAS, the Company has heretofore executed and delivered and the Trustee
has authenticated and delivered under the Indenture Bonds of Series A
through Y and all of such Bonds are fully registered; and
WHEREAS, the Company is authorized under Section 2.01 of the Original
Indenture to provide for the creation of additional series of bonds as more
fully set forth in paragraph 2 of Section 3.04 of the Original Indenture; and
WHEREAS, the Company is authorized under Section 13.01 of the
Original Indenture to execute supplemental indentures supplemental to the
Original Indenture; and
WHEREAS, the Company desires hereby to authorize and create under the
Indenture a series of bonds designated as "First Mortgage Bonds, Series Z,
5.76% due June 1, 1998" (hereinafter sometimes called "Bonds of Series Z") as
hereinafter set forth, the aggregate principal amount of which shall be
limited to $15,000,000, and the Company initially proposes to issue
$15,000,000 principal amount of said Bonds; and
WHEREAS, the Company also desires hereby to authorize and create under the
Indenture a series of bonds designated as "First Mortgage Bonds, Series AA,
6.89% due June 1, 2008" (hereinafter sometimes called "Bonds of Series AA") as
hereinafter set forth, the aggregate principal amount of which shall be
limited to $17,000,000, and the Company initially proposes to issue
$17,000,000 principal amount of said Bonds; and
WHEREAS, each of the Bonds of Series Z and Series AA to be issued hereunder
and the Trustee's authentication certificate upon said Bonds are to be
substantially as hereinafter set forth:
[Form of Bond of Series Z]
[The Trustee shall affix the following legend to each Bond as appropriate
to maintain the exemption from registration of the Bonds under the Securities
Act of 1933 as amended.
This Bond was originally issued in a transaction exempt from registration
under the Securities Act of 1933 (the "Securities Act") and may not be sold or
otherwise transferred in the absence of such registration or an applicable
exemption therefrom. This Bond may be resold, pledged or otherwise
transferred only (i) to a person whom the holder reasonably believes is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of such Rule 144A or
(ii) pursuant to an exemption from registration under the Securities Act and
in accordance with any applicable state securities laws.]
The Bond will also include the following legend:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
BOND REGISTERED, AND NO TRANSFER OF THIS BOND IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
First Mortgage Bond, Series Z, 5.76%
Due June 1, 1998
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA, a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania (herein called the
"Company", which term includes any successor corporation as defined in the
Indenture hereinafter referred to), for value received, hereby promises
to pay to or registered assigns, on the
first day of June, 1998, the sum of Dollars in such coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts, and to pay interest
thereon from the interest payment date next preceding the date of this Bond
(or, if this Bond be dated prior to December 1, 1993, from June 11, 1993), at
the rate of five and seventy-six one hundredths percent (5.76%) per annum,
semi-annually, in like coin or currency, on the first day of June and the
first day of December in each year, and to pay interest on any overdue
principal and (to the extent permitted by law) on any overdue installment of
interest at the rate of six and seventy-six one hundredths percent (6.76%) per
annum, until the Company's obligation with respect to the payment of such
principal shall be discharged. The interest so payable on any June 1 or
December 1 will, subject to certain exceptions provided in such Indenture, be
paid to the person in whose name this Bond is registered at the close of
business on May 15 or November 15, as the case may be, next preceding such
June 1 or December 1, or, if such May 15 or November 15 is not a business day,
the business day next preceding such May 15 or November 15. Payments of
principal and interest are to be made at the principal corporate trust office
of PNC Bank, National Association (hereinafter called the "Trustee") in the
City of Pittsburgh, Commonwealth of Pennsylvania. When funds have been made
available for this purpose, the Trustee, or the successor trustee, shall mail
its check for said interest to the person entitled thereto at his registered
address.
This Bond is one of a duly authorized issue of Bonds of the Company known
as its First Mortgage Bonds (herein called the "Bonds"), not limited in
aggregate principal amount except as provided in the Indenture hereinafter
mentioned, all issued and to be issued in one or more series under and equally
and ratably secured by an Indenture of Mortgage (herein called the
"Indenture"), dated as of January 1, 1951, executed by the Company to the
Trustee, to which Indenture and to the indenture supplemental thereto dated as
of June 1, 1993 (herein called the "Twenty-Second Supplemental Indenture"),
and to all other indentures supplemental thereto reference is hereby made for
a description of the property mortgaged and pledged, the nature and extent of
the security, the terms and conditions upon which the Bonds are and are to be
issued and secured and the rights of the registered owners thereof and of the
Trustee in respect of such security. As provided in the Indenture, said Bonds
may be issued in series for various principal sums, may bear different dates
and mature at different times, may bear interest at different rates and may
otherwise vary as in the Indenture provided or permitted. This Bond is one of
the Bonds described in the Twenty-Second Supplemental Indenture and designated
therein as "First Mortgage Bonds, Series Z, 5.76% due June 1, 1998" (herein
called the "Bonds of Series Z").
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the rights of the holders of the Bonds issued and to be issued thereunder, may
be made with the consent of the Company by the written consent of the holders
of not less than sixty-six and two-thirds percent (66 2/3 %) in principal
amount of the Bonds then outstanding under the Indenture and affected by such
modification or alteration, and, in case one or more but less than all of the
series of the Bonds then outstanding under the Indenture would be affected by
the modification or alteration differently from or without affecting the Bonds
of any of the other series, by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3 %) in principal amount of the
Bonds of each series so affected; provided, however, that no such modification
or alteration may be made which would extend the maturity of, or reduce the
principal amount of, or reduce the rate or extend the time of payment of
interest on, or reduce any premium payable upon any redemption of, this Bond,
or reduce the percentage required for the taking of any such action, without
the express consent of the holder hereof.
Under a provision to become effective when none of the Series L through X
Bonds are outstanding, or when appropriately consented to by the holders of
such Bonds, modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the rights of the holders of the Bonds issued and to be issued thereunder, may
be made (subject to the exceptions set forth in the preceding paragraph) with
the consent of the Company by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3%) in principal amount of the
Bonds then outstanding under the Indenture and affected by such modification
or alteration, and, in case one or more but less than all of the series of the
Bonds then outstanding under the Indenture would be affected by the
modification or alteration differently from or without affecting the Bonds of
any of the other series, by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3%) in principal amount of the
Bonds of all series affected in the same manner, voting as a group.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture or of any indenture supplemental thereto shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Bond at the time and place and at the rate
and in the coin or currency herein prescribed.
The Bonds of Series Z redeemed in connection with certain governmental
acquisitions or through the application of certain insurance proceeds or
through the sale of property of the Company shall be redeemed at their
principal amount plus interest accrued to the date fixed for redemption.
Notice of each of the aforesaid redemptions shall be given by certified
mail to the registered owner hereof at his registered address, such notice to
be mailed at least twenty-five (25) days prior to the date of redemption. Any
notice so mailed shall be conclusively presumed to have been duly given,
whether or not the owner receives it.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of all the Bonds may be declared due and payable in
the manner and with the effect provided in the Indenture.
This Bond is transferable by the registered owner hereof 15 on books of the
Company to be kept for that purpose at the principal office of the Trustee in
the City of Pittsburgh, Commonwealth of Pennsylvania, upon surrender hereof at
such office for cancellation and upon presentation of a written instrument of
transfer duly executed, and thereupon the Company shall issue in the name of
the transferee or transferees, and the Trustee shall authenticate and deliver,
a new registered Bond or Bonds of Series Z, in an authorized denomination or
denominations, of a like aggregate principal amount; and the registered owner
of this Bond may surrender the same at said office in exchange for a like
aggregate principal amount of Bonds of like form of other authorized
denominations; all upon the terms and conditions specified in the Indenture.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the person in whose name this Bond is registered as the owner hereof for
all purposes whether or not this Bond be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or in any indenture supplemental thereto, or in any Bond
thereby secured, or because of any indebtedness thereby secured, shall be had
against any incorporator, or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise; it being
expressly agreed and understood that the Indenture, any indenture supplemental
thereto and the obligations thereby secured, are solely corporate obligations,
and that no personal liability whatever shall attach to, or be incurred by,
such incorporators, stockholders, officers or directors, as such, of the
Company or of any successor corporation, or any of them because of the
incurring of the indebtedness thereby authorized, or under or by reason of any
of the obligations, covenants or agreements contained in the Indenture or in
any indenture supplemental thereto or in any of the Bonds thereby secured or
implied therefrom.
This Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, and shall not become valid or obligatory for
any purpose, until the Trustee under the Indenture, or a successor trustee
thereunder, shall have signed the form of authentication certificate endorsed
hereon.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
under its corporate seal.
Dated:
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
By
____________________________
President
Attest:
_____________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds, of the series designated therein, described
in the within-mentioned Indenture and Twenty-Second Supplemental Indenture.
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
By
____________________________
Authorized Officer
[Form of Bond of Series AA]
[The Trustee shall affix the following legend to each Bond as appropriate
to maintain the exemption from registration of the Bonds under the Securities
Act of 1933 as amended.
This Bond was originally issued in a transaction exempt from registration
under the Securities Act of 1933 (the "Securities Act") and may not be sold or
otherwise transferred in the absence of such registration or an applicable
exemption therefrom. This Bond may be resold, pledged or otherwise
transferred only (i) to a person whom the holder reasonably believes is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of such Rule 144A or
(ii) pursuant to an exemption from registration under the Securities Act and
in accordance with any applicable state securities laws.]
No. AAR-. . . $. . . . . .
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
First Mortgage Bond, Series AA, 6.89%
Due June 1, 2008
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA, a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania (herein called the
"Company", which term includes any successor corporation as defined in the
Indenture hereinafter referred to), for value received, hereby promises
to pay to or registered assigns, on the first
day of June, 2008, the sum of Dollars
in such coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts, and to
pay interest thereon from the interest payment date next preceding the date of
this Bond (or, if this Bond be dated prior to December 1, 1993, from June 11,
1993), at the rate of six and eighty-nine one hundredths percent (6.89%) per
annum, semi-annually, in like coin or currency, on the first day of June and
the first day of December in each year, and to pay interest on any overdue
principal and premium and (to the extent permitted by law) on any overdue
installment of interest at the rate of seven and eighty-nine one hundredths
percent (7.89%) per annum, until the Company's obligation with respect to the
payment of such principal shall be discharged. The interest so payable on any
June 1 or December 1 will, subject to certain exceptions provided in such
Indenture, be paid to the person in whose name this Bond is registered at the
close of business on May 15 or November 15, as the case may be, next preceding
such June 1 or December 1, or, if such May 15 or November 15 is not a business
day, the business day next preceding such May 15 or November 15. Payments of
principal and interest are to be made at the principal corporate trust office
of PNC Bank, National Association (hereinafter called the "Trustee") in the
City of Pittsburgh, Commonwealth of Pennsylvania. When funds have been made
available for this purpose, the Trustee, or the successor trustee, shall mail
its check for said interest to the person entitled thereto at his registered
address.
This Bond is one of a duly authorized issue of Bonds of the Company known
as its First Mortgage Bonds (herein called the "Bonds"), not limited in
aggregate principal amount except as provided in the Indenture hereinafter
mentioned, all issued and to be issued in one or more series under and equally
and ratably secured by an Indenture of Mortgage (herein called the
"Indenture"), dated as of January 1, 1951, executed by the Company to the
Trustee, to which Indenture and to the indenture supplemental thereto dated as
of June 1, 1993 (herein called the "Twenty-Second Supplemental Indenture"),
and to all other indentures supplemental thereto reference is hereby made for
a description of the property mortgaged and pledged, the nature and extent of
the security, the terms and conditions upon which the Bonds are and are to be
issued and secured and the rights of the registered owners thereof and of the
Trustee in respect of such security. As provided in the Indenture, said Bonds
may be issued in series for various principal sums, may bear different dates
and mature at different times, may bear interest at different rates and may
otherwise vary as in the Indenture provided or permitted. This Bond is one of
the Bonds described in the Twenty-Second Supplemental Indenture and designated
therein as "First Mortgage Bonds, Series AA, 6.89% due June 1, 2008" (herein
called the "Bonds of Series AA").
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the rights of the holders of the Bonds issued and to be issued thereunder, may
be made with the consent of the Company by the written consent of the holders
of not less than sixty-six and two-thirds percent (66 2/3 %) in principal
amount of the Bonds then outstanding under the Indenture and affected by such
modification or alteration, and, in case one or more but less than all of the
series of the Bonds then outstanding under the Indenture would be affected by
the modification or alteration differently from or without affecting the Bonds
of any of the other series, by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3 %) in principal amount of the
Bonds of each series so affected; provided, however, that no such modification
or alteration may be made which would extend the maturity of, or reduce the
principal amount of, or reduce the rate or extend the time of payment of
interest on, or reduce any premium payable upon any redemption of, this Bond,
or reduce the percentage required for the taking of any such action, without
the express consent of the holder hereof.
Under a provision to become effective when none of the Series L through X
Bonds are outstanding, or when appropriately consented to by the holders of
such Bonds, modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the rights of the holders of the Bonds issued and to be issued thereunder, may
be made (subject to the exceptions set forth in the preceding paragraph) with
the consent of the Company by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3%) in principal amount of the
Bonds then outstanding under the Indenture and affected by such modification
or alteration, and, in case one or more but less than all of the series of the
Bonds then outstanding under the Indenture would be affected by the
modification or alteration differently from or without affecting the Bonds of
any of the other series, by the written consent of the holders of not less
than sixty-six and two-thirds percent (66 2/3%) in principal amount of the
Bonds of all series affected in the same manner, voting as a group.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture or of any indenture supplemental thereto shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Bond at the time and place and at the rate
and in the coin or currency herein prescribed.
At the option of the Company and upon notice as provided in the Indenture,
the Bonds of Series AA shall be redeemable in whole at any time, or in part
from time to time prior to maturity in multiples of $100,000, at the principal
amount of the Bonds being redeemed plus interest accrued thereon to the date
fixed for such redemption, plus the Yield Maintenance Premium as defined in
the Twenty-Second Supplemental Indenture.
The Bonds of Series AA redeemed in connection with certain governmental
acquisitions or through the application of certain insurance proceeds or
through the sale of property of the Company shall be redeemed at their
principal amount plus interest accrued to the date fixed for redemption.
Notice of each of the aforesaid redemptions shall be given by certified
mail to the registered owner hereof at his registered address, such notice to
be mailed at least twenty-five (25) days prior to the date of redemption. Any
notice so mailed shall be conclusively presumed to have been duly given,
whether or not the owner receives it.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of all the Bonds may be declared due and payable in
the manner and with the effect provided in the Indenture.
This Bond is transferable by the registered owner hereof on books of the
Company to be kept for that purpose at the principal office of the Trustee in
the City of Pittsburgh, Commonwealth of Pennsylvania, upon surrender hereof at
such office for cancellation and upon presentation of a written instrument of
transfer duly executed, and thereupon the Company shall issue in the name of
the transferee or transferees, and the Trustee shall authenticate and deliver,
a new registered Bond or Bonds of Series AA, in an authorized denomination or
denominations, of a like aggregate principal amount; and the registered owner
of this Bond may surrender the same at said office in exchange for a like
aggregate principal amount of Bonds of like form of other authorized
denominations; all upon the terms and conditions specified in the Indenture.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the person in whose name this Bond is registered as the owner hereof for
all purposes whether or not this Bond be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or in any indenture supplemental thereto, or in any Bond
thereby secured, or because of any indebtedness thereby secured, shall be had
against any incorporator, or against any past, present or future stockholder,
officer or director, as such, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise; it being
expressly agreed and understood that the Indenture, any indenture supplemental
thereto and the obligations thereby secured, are solely corporate obligations,
and that no personal liability whatever shall attach to, or be incurred by,
such incorporators, stockholders, officers or directors, as such, of the
Company or of any successor corporation, or any of them because of the
incurring of the indebtedness thereby authorized, or under or by reason of any
of the obligations, covenants or agreements contained in the Indenture or in
any indenture supplemental thereto or in any of the Bonds thereby secured or
implied therefrom.
This Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, and shall not become valid or obligatory for
any purpose, until the Trustee under the Indenture, or a successor trustee
thereunder, shall have signed the form of authentication certificate endorsed
hereon.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
under its corporate seal.
Dated:
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
By
____________________________
President
Attest:
____________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds, of the series designated therein, described
in the within-mentioned Indenture and Twenty-Second Supplemental Indenture.
PNC BANK, NATIONAL ASSOCIATION,
as Trustee,
By
____________________________
Authorized Officer
WHEREAS, all things necessary to make the Bonds of Series Z and Series AA,
when duly executed by the Company and authenticated and delivered by the
Trustee and issued by the Company, the valid, binding and legal obligations of
the Company and to make this Twenty-Second Supplemental Indenture a valid,
binding and legal instrument for the security of the Bonds to be issued
hereunder, have been done and performed.
NOW, THEREFORE, THIS TWENTY-SECOND SUPPLEMENTAL INDENTURE WITNESSETH: THAT
THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA, in consideration of the premises
and of the acceptance by the Trustee of the trusts hereby created and of the
purchase and acceptance of said Bonds by the holders or registered owners
thereof and of One Dollar to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is hereby
acknowledged, and in order to secure the payment of the principal of and any
premium which may be due and payable on and the interest on all Bonds at any
time issued and outstanding hereunder, according to their tenor and effect,
and the performance and observance by the Company of all the covenants and
conditions herein and therein contained, has granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged, set over and
confirmed, and by these presents does grant, bargain, sell, release, convey,
assign, transfer, mortgage, pledge, set over and confirm, unto the Trustee,
party of the second part, and to its successors in the trusts hereby created,
and to it and its assigns forever, subject to the terms of the Indenture:
All and singular the premises, property rights and franchises of the
Company owned, constructed or acquired since the execution and delivery of the
Original Indenture and the First through Twenty-First Supplemental Indentures
of whatever character (both real and personal of the kinds described in the
Original Indenture) and wherever situated, except for property formerly owned
by Saltillo Telephone Company which was merged into the Company in 1983 and
after-acquired property located in Saltillo's operating area on which
Bondholders will have a second mortgage and except as in the Indenture
provided. The said property includes among other things the following (but
reference to or enumeration of any particular kinds, classes or items of
property shall not be deemed to exclude from the operation and effect of this
Twenty-Second Supplemental Indenture any kind, class or item not so referred
to or enumerated) viz: all the real estate described in those certain deeds
from the respective Grantors named therein, dated and recorded as set forth in
the respective Exhibits to this Indenture as supplemented by Exhibit A hereto,
situate in the respective counties of the Commonwealth of Pennsylvania therein
set forth.
TOGETHER WITH all and singular the tenements, hereditaments and
appurtenances belonging or in anywise pertaining to the aforesaid premises,
property, rights and franchises or any part thereof, with the reversion and
reversions, remainder and remainders, and, to the extent permitted by law, all
tolls, rents, revenues, issues, income, products and profits thereof, and all
the estate, right, title, interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the
aforesaid premises, property, rights and franchises and every part and parcel
thereof.
TO HAVE AND TO HOLD all said premises, property, rights and franchises
granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, pledged, set over or confirmed by the Company as aforesaid or
intended so to be, unto the Trustee and its successors in the trusts, and to
it and its assigns forever.
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for the
equal and proportionate benefit and security of those who shall hold or own
the Bonds issued and to be issued under the Indenture, without preference of
any of said Bonds over any others thereof by reason of priority in the time of
the issue or negotiations thereof or by reason of the date or maturity
thereof, or for any other reason whatsoever.
IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the parties
hereto, that all such Bonds are to be issued, authenticated and delivered, and
that all property subject or to become subject hereto is to be held and
applied, subject to the further covenants, conditions, uses and trusts
hereinafter set forth; and the Company, for itself and its successors, does
hereby covenant and agree to and with the Trustee and its successors in the
trusts under the Indenture, for the benefit of those who shall hold or own
said Bonds, or any of them, as follows:
ARTICLE I
BONDS OF SERIES Z
Section 1.01. Creation and Certain Terms of Bonds of Series Z. A series
of Bonds to be issued and secured under the Indenture is hereby created, which
shall be designated as, and shall be distinguished from the Bonds of all other
series by the title, "First Mortgage Bonds, Series Z, 5.76% due June 1, 1998",
sometimes herein referred to as the "Bonds of Series Z". Except as otherwise
provided in this Twenty-Second Supplemental Indenture, the Bonds of Series Z
shall be issued, authenticated and delivered as provided in and shall in all
respects be subject to the terms, conditions and covenants of the Indenture.
The signatures of the officers executing the Bonds of Series Z on behalf of
the Company and attesting to the facsimile of its corporate seal thereon may
be facsimile.
The aggregate principal amount of the Bonds of Series Z is limited to
$15,000,000 except as provided in Section 2.11 of the Original Indenture.
All Bonds of Series Z shall be due June 1, 1998, and shall bear interest at
the rate of five and seventy-six one hundredths percent (5.76%) per annum
payable semiannually on the first day of June and the first day of December in
each year (each such June 1 and December 1 being hereinafter called an
"interest payment date"), and shall bear interest on any overdue principal and
(to the extent permitted by law) on any overdue installment of interest at the
rate of six and seventy-six one hundredths percent (6.76%) per annum.
The interest so payable on any interest payment date shall be paid to the
persons in whose names the Bonds of Series Z are registered at the close of
business on May 15 or November 15 (hereinafter called a "record date"), as the
case may be, next preceding such June 1 or December 1, or, if such May 15 or
November 15 is not a business day, the business day next preceding such May 15
or November 15, a "business day" being any day that is not a day on which
banks in the City of Pittsburgh are authorized by law to close, except that if
the Company shall default in the payment of any interest due on such interest
payment date, such defaulted interest shall be paid to the persons in whose
names the Bonds of Series Z are registered on the date of payment of such
defaulted interest.
In any case where any interest payment date, or any date on which any
payment of principal is due, whether at stated maturity, upon redemption or
otherwise, of any Bond of Series Z shall not be a business day, then
(notwithstanding any other provision of the Indenture or of the Bonds of
Series Z) payment of interest or principal need not be made on such date, but
may be made on the next succeeding business day with the same force and effect
as if made on the interest payment date or date on which the payment of
principal was due, provided that no interest shall accrue for the period from
and after such interest payment date or date on which such payment of
principal was due, as the case may be.
Except as provided hereinafter and in Sections 2.11 and 2.12 of Article II
of the Original Indenture, every Bond of Series Z shall be dated as of the
date of its authentication and delivery, or if that is an interest payment
date, the next day, and shall bear interest from the interest payment date
next preceding its date or, if dated prior to December 1, 1993, from June 11,
1993; provided, however, that notwithstanding Section 2.05 of Article II of
the Original Indenture and except as provided in Sections 2.11 and 2.12 of
such Article II, any Bond of Series Z authenticated and delivered by the
Trustee after the close of business on the record date with respect to any
interest payment date and prior to such interest payment date shall be dated
as of the date next following such interest payment date and shall bear
interest from such interest payment date; except that if the Company shall
default in the payment of any interest due on such interest payment date,
such Bond shall bear interest from the next preceding interest payment date to
which interest has been paid or, if no interest has been paid on such Bond,
from its date.
The Bonds of Series Z shall be fully registered Bonds without coupons in
the denominations of One Thousand Dollars ($1,000) and any integral multiple
thereof, numbered ZR-1 and upwards.
The principal of and the interest on the Bonds of Series Z shall be payable
at the principal corporate trust office of the Trustee in the City of
Pittsburgh, Commonwealth of Pennsylvania, in coin or currency of the United
States of America which at the time of payment is legal tender for the payment
of public and private debts. The Bonds of Series Z shall be exchangeable and
transferable at said office as provided in Section 2.08 of the Original
Indenture (but the Company shall not require the payment to it of any charge
for effecting such transfer except for reimbursement of governmental taxes and
charges).
The Bonds of Series Z shall be redeemable in whole or in part pursuant to
any provision of the Indenture permitting such redemption only in the
circumstances and at the prices hereinafter provided; provided, however, that
the Bonds of Series Z shall not be redeemed pursuant to Section 7.04 of the
Indenture unless the Bonds of Series Z are redeemed, to the extent
practicable, pro rata with the Bonds of all series then outstanding on the
basis of the respective principal amounts then outstanding.
If redeemed (i) in connection with the sale of all or any part of the
properties of the Company to, or other acquisition of such properties by, one
or more municipal corporations or other governmental subdivisions or
governmental bodies, authorities or agencies as the result of the actual or
threatened use of the power of eminent domain, (ii) by application of
insurance proceeds received because of damage to or destruction of any of the
Company's properties, or (iii) in connection with the sale of property by the
Company, the Bonds of Series Z are redeemable in such coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts at the principal amount thereof, together
with interest accrued to the date fixed for redemption.
The text of the Bonds of Series Z and of the authentication certificate of
the Trustee upon said Bonds shall be, respectively, substantially of the tenor
and effect hereinbefore recited with respect thereto.
BONDS OF SERIES AA
Section 1.02. Creation and Certain Terms of Bonds of Series AA. A series
of Bonds to be issued and secured under the Indenture is hereby created, which
shall be designated as, and shall be distinguished from the Bonds of all other
series by the title, "First Mortgage Bonds, Series AA, 6.89% due June 1,
2008", sometimes herein referred to as the "Bonds of Series AA". Except as
otherwise provided in this Twenty-Second Supplemental Indenture, the Bonds of
Series AA shall be issued, authenticated and delivered as provided in and
shall in all respects be subject to the terms, conditions and covenants of the
Indenture. The signatures of the officers executing the Bonds of Series AA on
behalf of the Company and attesting to the facsimile of its corporate seal
thereon may be facsimile.
The aggregate principal amount of the Bonds of Series AA is limited to
$17,000,000 except as provided in Section 2.11 of the Original Indenture.
All Bonds of Series AA shall be due June 1, 2008, and shall bear interest
at the rate of six and eighty-nine one hundredths percent (6.89%) per annum
payable semiannually on the first day of June and the first day of December in
each year (each such June 1 and December 1 being hereinafter called an
"interest payment date"), and shall bear interest on any overdue principal and
premium and (to the extent permitted by law) on any overdue installment of
interest at the rate of seven and eighty-nine one hundredths percent (7.89%)
per annum.
The interest so payable on any interest payment date shall be paid to the
persons in whose names the Bonds of Series AA are registered at the close of
business on May 15 or November 15 (hereinafter called a "record date"), as the
case may be, next preceding such June 1 or December 1, or, if such May 15 or
November 15 is not a business day, the business day next preceding such May 15
or November 15, a "business day" being any day that is not a day on which
banks in the City of Pittsburgh are authorized by law to close, except that if
the Company shall default in the payment of any interest due on such interest
payment date, such defaulted interest shall be paid to the persons in whose
names the Bonds of Series AA are registered on the date of payment of such
defaulted interest.
In any case where any interest payment date, or any date on which any
payment of principal is due, whether at stated maturity, upon redemption or
otherwise, of any Bond of Series AA shall not be a business day, then
(notwithstanding any other provision of the Indenture or of the Bonds of
Series AA) payment of interest or principal need not be made on such date, but
may be made on the next succeeding business day with the same force and effect
as if made on the interest payment date or date on which the payment of
principal was due, provided that no interest shall accrue for the period from
and after such interest payment date or date on which such payment of
principal was due, as the case may be.
Except as provided hereinafter and in Sections 2.11 and 2.12 of Article II
of the Original Indenture, every Bond of Series AA shall be dated as of the
date of its authentication and delivery, or if that is an interest payment
date, the next day, and shall bear interest from the interest payment date
next preceding its date or, if dated prior to December 1, 1993, from June 11,
1993; provided, however, that notwithstanding Section 2.05 of Article II of
the Original Indenture and except as provided in Sections 2.11 and 2.12 of
such Article II, any Bond of Series AA authenticated and delivered by the
Trustee after the close of business on the record date with respect to any
interest payment date and prior to such interest payment date shall be dated
as of the date next following such interest payment date and shall bear
interest from such interest payment date; except that if the Company shall
default in the payment of any interest due on such interest payment date,
such Bond shall bear interest from the next preceding interest payment date to
which interest has been paid or, if no interest has been paid on such Bond,
from its date.
The Bonds of Series AA shall be fully registered Bonds without coupons in
the denominations of One Thousand Dollars ($1,000) and any integral multiple
thereof, numbered AAR-1 and upwards.
The principal of and the interest on the Bonds of Series AA shall be
payable at the principal corporate trust office of the Trustee in the City of
Pittsburgh, Commonwealth of Pennsylvania, in coin or currency of the United
States of America which at the time of payment is legal tender for the payment
of public and private debts. The Bonds of Series AA shall be exchangeable and
transferable at said office as provided in Section 2.08 of the Original
Indenture (but the Company shall not require the payment to it of any charge
for effecting such transfer except for reimbursement of governmental taxes and
charges).
The Bonds of Series AA shall be redeemable in whole or in part pursuant to
any provision of the Indenture permitting such redemption only in the
circumstances and at the prices hereinafter provided; provided, however, that
the Bonds of Series AA shall not be redeemed pursuant to Section 7.04 of the
Indenture unless the Bonds of Series AA are redeemed, to the extent
practicable, pro rata with the Bonds of all series then outstanding on the
basis of the respective principal amounts then outstanding.
At the option of the Company, the Series AA Bonds shall be redeemable in
whole at any time, or in part from time to time prior to maturity in multiples
of $100,000, at the principal amount of the Bonds being redeemed plus interest
accrued thereon to the date fixed for such redemption, plus the Yield
Maintenance Premium. The Yield Maintenance Premium shall be the excess, if
any, of (i) the aggregate present value, as of the date fixed for redemption,
of all remaining payments of principal and interest scheduled to be made on or
after the date fixed for redemption with respect to the principal amount of
the Bonds being redeemed (subtracting from the first such interest payment,
interest accrued to the date fixed for redemption), determined by discounting
on a semi-annual basis such amounts at the Discount Rate, over (ii) the
principal amount of the Bonds being redeemed. The Discount Rate shall be equal
to the sum of (i) the Yield on U.S. Treasury securities, on the third trading
day preceding the date fixed for redemption, having a maturity corresponding
to the Weighted Average Life of the Bonds being redeemed and (ii) one-half of
one percent. If no U.S. Treasury security maturity exactly corresponds to
such Weighted Average Life of the Bonds to be redeemed, yields for the two
such Treasury maturities most closely corresponding to such Weighted Average
Life of the Bonds to be redeemed shall be interpolated or extrapolated from
such Treasury yields on a straight-line basis, rounding to the nearest month
to determine the Yield on U.S. Treasury securities. The Weighted Average Life
of the Bonds being redeemed shall mean, as of the date of any determination
thereof, the number of years obtained by dividing the Remaining Dollar-Years
of such principal by the aggregate amount of such principal. The Remaining
Dollar-Years of such principal shall equal the amount obtained by (i)
multiplying (x) the remainder of (1) the amount of principal that would have
become due on each scheduled payment date if such redemption had not been
made, less (2) the amount of principal scheduled to become due after giving
effect to such redemption, by (y) the number of years (calculated to the
nearest one-twelfth) between the date of determination and such scheduled
payment date, and (ii) totaling the products obtained in (i). The Yield on
U.S. Treasury securities, with respect to a particular maturity on a
particular date, shall mean the yield reported for U.S. Treasury securities of
such maturity in the first listed of the following publications then
available: (1) page "USD" of the Bloomberg Financial Markets Services Screen
at 11:00 a.m., New York time, on such date, (2) any similar nationally
recognized trading screen reporting on-line intra-day trading in U.S. Treasury
securities at 11:00 a.m., New York time, on such date, (3) the arithmetic mean
of the yields reported under the headings "This Week" and "Last Week" in the
Federal Reserve System's statistical release designated "H.15(519)" most
recently published on or before such date, or (4) any other reasonably
comparable index approved by the Company.
If redeemed (i) in connection with the sale of all or any part of the
properties of the Company to, or other acquisition of such properties by, one
or more municipal corporations or other governmental subdivisions or
governmental bodies, authorities or agencies as the result of the actual or
threatened use of the power of eminent domain, (ii) by application of
insurance proceeds received because of damage to or destruction of any of the
Company's properties, or (iii) in connection with the sale of property by the
Company, the Bonds of Series AA are redeemable in such coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts at the principal amount thereof, together
with interest accrued to the date fixed for redemption.
The text of the Bonds of Series AA and of the authentication certificate of
the Trustee upon said Bonds shall be, respectively, substantially of the tenor
and effect hereinbefore recited with respect thereto.
ARTICLE II
PARTICULAR COVENANTS OF THE COMPANY
Section 2.01. The holders of the Bonds of Series Z and Series AA, by their
acceptance and holding thereof, hereby consent and agree that, effective on
the earliest date on which either (a) all Series L and M Bonds have been
retired, or (b) the holders of 66 2/3 % of the principal amount of the Series
L and M Bonds then outstanding have consented to such amendment, Section 6.04
of the Original Indenture is amended by deleting the entire first paragraph
thereof and substituting in its stead:
The Company may sell, exchange or otherwise dispose of any of its property
(in addition to the property referred to in Sections 6.01, 6.02 and 6.03) at
any time subject to the lien hereof, of an aggregate Fair Value to the Company
not exceeding one-tenth of one percent (0.1%) of total telephone plant in
service in any one calendar year, without notice to or any release or consent
by the Trustee and without any deposit with the Trustee.
Section 2.02. The holders of the Bonds of Series Z and Series AA, by their
acceptance and holding thereof, hereby consent and agree that, effective on
the earliest date on which either (a) all Series L and M Bonds have been
retired, or (b) the holders of 66 2/3 % of the principal amount of the Series
L and M Bonds then outstanding have consented to such amendment, Section 4.05
of the Original Indenture is amended by deleting the phrase "Ten Thousand
Dollars ($10,000)" from the first paragraph and the third paragraph thereof
and substituting in lieu thereof the phrase, "one-tenth of one percent (0.1%)
of total telephone plant in service of the Company".
Section 2.03. The holders of the Bonds of Series Z and Series AA, by their
acceptance and holding thereof, hereby consent and agree that each of the
amendments to the Indenture set forth in Sections 2.11 through 2.25 of Article
II of the Twenty-First Supplemental Indenture shall be effective on the
earliest date on which either (a) all Series L through X Bonds have been
retired or (b) such amendment shall have become effective upon the requisite
consent of the Holders of the Bonds of Series L through X.
Section 2.04. Section 1.01 of the Indenture is amended by adding a
definition of "Depositary" and a definition of "Global Security" as follows:
Depositary: The term "Depositary" means, with respect to bonds of any
series issuable in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Securities Exchange Act of
1934 that is designated to act as Depositary for such bonds.
Global Security: The term "Global Security" means a bond that evidences
all or part of the bonds of any series and bears the legend set forth in
Section 2.15 (or such legend as may be specified as contemplated by said
Section 2.15 for such bonds).
Section 2.05. The Indenture is amended by adding a new Section 2.15 as
follows:
Section 2.15. The bonds of any series may be issuable in whole or in part
in the form of one or more Global Securities. In such case, there shall be
established the respective Depositaries for such Global Securities, the form
of any legend or legends which shall be borne by any such Global Security in
addition to or in lieu of that set forth in the next paragraph and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of this Section 2.15 in which any such Global Security may
be exchanged in whole or in part for bonds registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or
names of persons other than the Depositary for such Global Security or a
nominee thereof.
The bonds of any series issuable in whole or in part in the form of one or
more Global Securities shall have such legends or endorsements placed thereon
as may be required to comply with the rules of any Depositary therefor.
Unless otherwise specified as contemplated in this Section 2.15 for the bonds
evidenced thereby, every Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
BOND REGISTERED, AND NO TRANSFER OF THIS BOND IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security
or a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
bond for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for bonds registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (i) has notified the Company that
it is unwilling or unable to continue as Depositary for such Global Security
or (ii) has ceased to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, (B) there shall have occurred and be
continuing an event of default with respect to such Global Security or (C)
there shall exist such circumstances, if any, in addition to or in lieu of the
foregoing as have been specified for this purpose as contemplated by the first
paragraph of this Section 2.15.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other bonds may be made in whole or in part, and all bonds issued in exchange
for a Global Security or any portion thereof shall be registered in such names
as the Depositary for such Global Security shall direct.
(4) Every bond authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 2.09, 2.10, 2.11, 5.03 or
14.05 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such bond is registered in the name of a
person other than the Depositary for such Global Security or a nominee
thereof.
Section 2.06. The Indenture is amended by adding a new Section 2.16 as
follows:
Section 2.16. The Company may set any day as a record date for the purpose
of determining the holders of outstanding bonds of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by holders of bonds of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the holders of outstanding
bonds of the relevant series on such record date, and no other holders, shall
be entitled to take the relevant action, whether or not such holders remain
holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by holders of the requisite principal amount of outstanding bonds of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any
person be cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by holders of the requisite
principal amount of outstanding bonds of the relevant series on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by holders and the applicable Expiration Date to be
given to the Trustee and to each holder of bonds of the relevant series in
writing.
The Trustee may set any day as a record date for the purpose of determining
the holders of outstanding bonds of any series entitled to join in the giving
or making of (i) any notice of default, (ii) any declaration of acceleration
referred to in Section 8.01, (iii) any request referred to in Section 8.05,
Section 12.02 or Section 12.08 or (iv) any direction referred to in Section
8.09, in each case with respect to bonds of such series. If any record date
is set pursuant to this paragraph, the holders of outstanding bonds of such
series on such record date, and no other holders, shall be entitled to join in
such notice, declaration, request or direction, whether or not such holders
remain holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by holders of the requisite principal amount of outstanding bonds of such
series on such record date. Nothing in this paragraph shall be construed to
prevent the Trustee from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any
person be cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by holders of the requisite
principal amount of outstanding bonds of the relevant series on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Company's expense, shall cause notice of such
record date, the proposed action by holders and the applicable Expiration Date
to be given to the Company and to each holder of bonds of the relevant series
in writing.
With respect to any record date set pursuant to this Section 2.16, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each holder of bonds of the relevant series, on or prior to
the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section 2.16, the party hereto
which set such record date shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect thereto,
subject to its right to change the Expiration Date as provided in this
paragraph. Not withstanding the foregoing, no Expiration Date shall be later
than the 180th day after the applicable record date.
Without limiting the foregoing, a holder entitled hereunder to take any
action hereunder with regard to any particular bond may do so with regard to
all or any part of the principal amount of such bond or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 2.07. The amendments to the Indenture set forth in Sections 2.04
through 2.06 are for the purpose of permitting Global Securities to be issued
under the Indenture, and pursuant to Section 13.01(f) of the Indenture, shall
be effective immediately without the consent of the holders of outstanding
bonds.
ARTICLE III
DEFEASANCE
Section 3.01. Applicability of Article; Company's Option to Effect
Defeasance.
The Company may at its option by Board Resolution, at any time with respect
to the Bonds of Series Z and Series AA, elect to have either Section 3.02 or
3.03 of this Article III be applied to the outstanding Bonds of Series Z or
Series AA, or both Series Z and Series AA (hereinafter in this Article III,
the "Defeased Bonds") upon compliance with the conditions set forth in this
Article III.
Section 3.02. Defeasance and Discharge.
Upon the Company's exercise of the option applicable to this Section, the
Company shall be deemed to have been discharged from its obligations with
respect to the outstanding Defeased Bonds on the date the conditions set forth
below are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the outstanding Defeased Bonds, and to
have satisfied all its other obligations under the Defeased Bonds and the
Indenture insofar as the Defeased Bonds are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (a) the rights of holders of outstanding Defeased
Bonds to receive, solely from the trust fund described in Section 3.04 herein
and as more fully set forth in such Section, payments in respect of the
principal of (and premium, if any) and interest on the Defeased Bonds when
such payments are due, (b) the Company's obligations with respect to such
Defeased Bonds under Sections 2.05, 2.08, 2.10, 2.11, 2.14, 4.03, 4.16 and
12.07 of the Indenture, (c) the rights, powers, trusts, duties, and immunities
of the Trustee under the Indenture and (d) this Article III. Subject to
compliance with this Article III, the Company may exercise its option under
this Section 3.02 notwithstanding the prior exercise of its option under
Section 3.03 of this Article III with respect to the Defeased Bonds.
Section 3.03. Covenant Defeasance.
Upon the Company's exercise of the option applicable to this Section, the
Defeased Bonds shall no longer be entitled to the benefits of the lien of the
Indenture, which shall be deemed to be released for all purposes of the
Indenture with respect to the Defeased Bonds, and the Defeased Bonds shall not
be deemed to be outstanding for purposes of Section 3.06 of the Indenture, on
and after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance").
Section 3.04. Conditions to Defeasance.
The following shall be the conditions to application of either Section 3.02
or Section 3.03 of this Article III to the outstanding Bonds of Series Z or
Series AA:
(1) the Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Sections
12.16 of the Indenture, who shall agree to comply with the provisions of this
Article III applicable to it), as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the Defeased Bonds, (a)
money in an amount, or (b) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than one day before the due date of
any payment, money in an amount, or (c) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of (and premium, if any, on) and
each installment of principal of (and premium, if any) and interest on the
outstanding Defeased Bonds on the stated maturity of such principal or
installment of principal or interest. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the payment of which its full faith and credit is
pledged or (y) obligations of a person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by
such depository receipt.
(2) No event of default or event which with notice or lapse of time or both
would become an event of default with respect to the Defeased Bonds shall have
occurred and be continuing on the date of such deposit or, insofar as Sections
8.01 (e), (f), or (g) of the Indenture are concerned, at any time during the
period ending on the 91st day after the date of such deposit or, if longer,
ending on the day following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not cause the Trustee for
the Defeased Bonds to have a conflicting interest as defined in Section 12.19
of the Indenture and for purposes of the Trust Indenture Act of 1939, as
amended, with respect to any securities of the Company.
(4) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, the Indenture or any other
agreement or instrument to which the Company is a party or by which it is
bound.
(5) Such defeasance or covenant defeasance shall not cause any Defeased Bonds
then listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.
(6) In the case of an election under Section 3.02 of this Article III, the
Company shall have delivered to the Trustee an opinion of counsel stating that
(a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (b) subsequent to June 1, 1993 there has
been a change in the applicable Federal income tax law in either case to the
effect that, and based thereon such opinion shall confirm that, the holders of
the outstanding Defeased Bonds will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred.
(7) In the case of an election under Section 3.03 of this Article III, the
Company shall have delivered to the Trustee an opinion of counsel to the
effect that the holders of the outstanding Defeased Bonds will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such covenant defeasance had not occurred.
Section 3.05. Deposited Money and U.S. Government Obligations to be Held
in Trust; Miscellaneous.
All money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee - collectively, for
purposes of this Section 3.05, the "Trustee") pursuant to Section 3.04 of this
Article III in respect of the outstanding Defeased Bonds shall be held in
trust and applied by the Trustee, in accordance with the provisions of the
Defeased Bonds and the Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the holders of the Defeased Bonds, of all sums due
and to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 3.04 of this Article III or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of the outstanding
Defeased Bonds.
Anything in this Article III to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the written request
of the Company any money or U.S. Government Obligations held by it as provided
in Section 3.04 of this Article III which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
defeasance or covenant defeasance.
Section 3.06. Notice of Defeasance.
Notice of defeasance or covenant defeasance shall be given by first-class
mail, postage prepaid, mailed not more than 30 days following the date of
deposit of money or U.S. Government Obligations pursuant to Section 3.04, to
each registered owner of Defeased Bonds at his address as it appears on the
bond register not less than 10 days prior to such date of mailing. Notice of
defeasance or covenant defeasance shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. The aggregate principal amount of Bonds of Series Z is
limited to $15,000,000 except as provided in Section 2.11 of the Original
Indenture.
Section 4.02 The aggregate principal amount of Bonds of Series AA is
limited to $17,000,000 except as provided in Section 2.11 of the Original
Indenture.
Section 4.03. Counterparts. This Twenty-Second Supplemental Indenture may
be simultaneously executed in any number of counterparts, and all said
counterparts executed and delivered, each as an original, shall constitute but
one and the same instrument.
Section 4.04. The Trustee accepts the trusts hereby effected but only upon
the terms and conditions set forth in the Indenture. Without limiting the
generality of the foregoing, the Trustee assumes no responsibility for the
correctness of the recitals of fact herein contained, which shall be taken as
the statements, representations and warranties of the Company. The Trustee
makes no representations as to the security offered hereby or as to the
validity of this Twenty-Second Supplemental Indenture (except with respect to
the execution by the Trustee), relying entirely upon the statements,
representations and warranties of the Company that this Twenty-Second
Supplemental Indenture is entirely valid for the purposes stated herein. The
Trustee may at any time require of the Company full information as to the
performance of any covenant hereunder; and, if information satisfactory to it
is not forthcoming, the Trustee may make or cause to be made, at the expense
of the Company, an investigation into the affairs of the Company related to
the Indenture. Except as otherwise provided in the Indenture, the Trustee
shall not be responsible for the priority, recording or filing of this
Indenture or any amendments or supplements thereto, financing statements, or
for the validity of the execution by the Company of any supplements to the
Indenture or instruments of further assurance.
IN WITNESS WHEREOF, THE UNITED TELEPHONE COMPANY OF PENNSYLVANIA has caused
these presents to be signed in its corporate name by its President or one of
its Vice Presidents and sealed with its corporate seal, attested by its
Secretary or one of its Assistant Secretaries; and PNC BANK, NATIONAL
ASSOCIATION has caused these presents to be signed in its corporate name by an
authorized officer and sealed with its corporate seal, attested by an
authorized officer, all as of the day, month and year first above written.
THE UNITED TELEPHONE COMPANY
OF PENNSYLVANIA
By /s/ RICHARD C. ECKHART
_______________________________________
Vice President-Finance & Administration
Attest:
/s/ DANIEL T. DINEEN [CORPORATE SEAL]
___________________________
Secretary
Signed, sealed and delivered by
THE UNITED TELEPHONE COM-
PANY OF PENNSYLVANIA in the
presence of:
/s/ JOYCE H. EDMISTON
___________________________
/s/ CONSTANCE A. MOYER
___________________________
PNC BANK, NATIONAL ASSOCIATION
By /s/ J. G. ROUTH
_______________________________________
Authorized Officer
Attest:
/s/ AMY R. HOWCROFT
___________________________
Officer [CORPORATE SEAL]
Signed, sealed and delivered by
PNC BANK, NATIONAL ASSOCIATION
in the presence of:
/s/ SHERRY J. LOCKE
___________________________
/s/ JANEEN R. REIMOND
___________________________
COMMONWEALTH OF PENNSYLVANIA } ss.:
COUNTY OF CUMBERLAND
I certify that on this 7th day of June, 1993, before me, Peggy A. Nailor,
a Notary Public in and for said County and Commonwealth, appeared Richard C.
Eckhart, to me personally known and known to me to be Vice President-Finance
and Administration of The United Telephone Company of Pennsylvania and the
person whose name is signed to the foregoing instrument, who, being by me duly
sworn, deposed and said that he is Vice President-Finance and Administration
of The United Telephone Company of Pennsylvania; that he knows the corporate
seal of the said corporation; that the seal affixed to the foregoing
instrument is the corporate seal of the said corporation; that it was so
affixed by order of said corporation; and that he signed his name as Vice
President-Finance and Administration of said corporation to said instrument by
like order; and thereupon said Richard C. Eckhart acknowledged that he signed
said instrument as his free and voluntary act and that said corporation
executed said instrument as its free and voluntary act for the purposes and
uses therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 7th
day of June, 1993.
/s/ PEGGY A. NAILOR
_______________________________
Notary Public
[NOTARIAL SEAL]
My Commission Expires
June 29, 1995
South Middleton Township
Cumberland County, PA
COMMONWEALTH OF PENNSYLVANIA } ss.:
COUNTY OF ALLEGHENY
I certify that on this 8th day of June, 1993, before me, Mark C. Baker, a
Notary Public in and for said County and Commonwealth, appeared
J. G. Routh, to me personally known and known to me to be an Authorized
Officer of PNC BANK, NATIONAL ASSOCIATION and the person whose name is signed
to the foregoing instrument, who, being by me duly sworn, deposed and said
that he is an Authorized Officer of PNC BANK, NATIONAL ASSOCIATION; that he
knows the corporate seal of the said bank; that the seal affixed to the
foregoing instrument is the corporate seal of the said bank; that it was so
affixed by order of said bank; and that he signed his name as an Authorized
Officer of said bank to said instrument by like order; and thereupon said J.
G. Routh acknowledged that he signed said instrument as his free and voluntary
act and that said bank executed said instrument as its free and voluntary act
for the purposes and uses therein set forth.
I hereby certify that I am not a director or officer of the above-
mentioned bank.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 8th
day of June, 1993.
/s/ MARK C. BAKER
__________________________
Notary Public
[ NOTARIAL SEAL ]
Notary Public,
Pittsburgh, Allegheny Co.
My Commission Expires July 13, 1996
PNC Bank, National Association, Mortgagee and Trustee named in the
foregoing Twenty-Second Supplemental Indenture, hereby certifies that its
precise name and corporate trust address are as follows:
PNC Bank, National Association, One Oliver Plaza, 23rd floor, Pittsburgh,
Pennsylvania 15265.
PNC BANK, NATIONAL ASSOCIATION
By /s/ J. G. ROUTH
__________________________
Authorized Officer
EXHIBIT A
Recorded
Grantor Location Date of Deed Book Page
NONE
RECORDING DATA
Executed counterparts of this Twenty-Second Supplemental Indenture, dated
as of June 1, 1993, were recorded in the Offices for the Recording of Deeds in
and for certain Counties of Pennsylvania as follows:
Date Mortgage
County Recorded Book Page
Adams June 9, 1993 736 55
Armstrong June 9, 1993 1300 146
Beaver June 9, 1993 1264 605
Bedford June 9, 1993 521 639
Blair June 9, 1993 1073 325
Butler June 9, 1993 2326 284
Centre June 9, 1993 699 727
Clarion June 9, 1993 408 856
Clinton June 9, 1993 615 208
Cumberland June 9, 1993 1141 214
Dauphin June 9, 1993 1987 365
Franklin June 9, 1993 885 256
Fulton June 9, 1993 199 271
Huntingdon June 9, 1993 327 46
Juniata June 9, 1993 175 966
Lancaster June 9, 1993 3920 577
Lawrence June 9, 1993 1088 357
Lebanon June 9, 1993 675 602
Mercer June 9, 1993 144 1569
Mifflin June 9, 1993 398 862
Perry June 9, 1993 739 27
Snyder June 9, 1993 313 234
Somerset June 9, 1993 1201 581
Venango June 9, 1993 576 101
York June 9, 1993 646 1086
