<PAGE>
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or
240.14a-12
Central Telephone Company
(Name of Registrant as Specified In Its Charter)
Marion W. O'Neill, Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee Computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
___________________________________________________________
2) Aggregate number of securities to which transaction
applies:
___________________________________________________________
3) Aggregate number of securities to which transaction
computed pursuant to Exchange Act Rule 0-11:<F1>
___________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________
[FN]
<F1> Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________
3) Filing Party:
___________________________________________________________
4) Date Filed:
___________________________________________________________
<PAGE>
PRELIMINARY COPY
NOTICE OF 1994 ANNUAL MEETING
AND PROXY STATEMENT
CENTRAL TELEPHONE COMPANY
2330 SHAWNEE MISSION PARKWAY
WESTWOOD, KANSAS 66205
To Our Shareowners:
The Central Telephone Company Annual Meeting of Shareowners
will be held at the offices of Sprint Corporation located at 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, on Thursday,
November 3, 1994 at 11:00 A.M.
Seven Directors will be elected at the Annual Meeting. You
are also being asked to approve amendments to the Certificate of
Incorporation to decrease the authorized shares of the Company's
stock and to approve a reverse stock split on the Company's
common stock.
Whether or not you plan to attend the meeting, we urge you
to complete and return the enclosed form of proxy promptly to
ensure that your shares will be represented. If you attend the
meeting, you can vote in person even if you have sent in your
proxy card.
Very truly yours,
D. Wayne Peterson
Chief Executive Officer
September 27, 1994
<PAGE>
NOTICE OF MEETING
The Annual Meeting of Shareowners of Central Telephone
Company will be held at the offices of Sprint Corporation, 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, on Thursday,
November 3, 1994 at 11:00 A.M. to:
1. Elect seven Directors;
2. Approve an amendment to the Certificate of Incorporation
decreasing the authorized shares of common stock and approve a
reverse stock split of the common stock;
3. Approve an amendment to the Certificate of Incorporation
decreasing the authorized shares of cumulative preferred stock;
4. Approve an amendment to the Certificate of Incorporation
decreasing the authorized shares of convertible junior preferred
stock; and
5. Transact such other business as may properly come before the
meeting.
Shareowners of record at the close of business on September
8, 1994, will be entitled to vote.
By Order of the Board of Directors
Marion W. O'Neill
Secretary
September 27, 1994
Please complete the accompanying proxy and return it promptly in
the addressed envelope enclosed.
<PAGE>
CENTRAL TELEPHONE COMPANY
2330 SHAWNEE MISSION PARKWAY
WESTWOOD, KANSAS 66205
Proxy Statement
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Central
Telephone Company (the Company) for use at the Annual Meeting of
Shareowners to be held on November 3, 1994. This Proxy Statement
and the accompanying Notice of Meeting, proxy card and the
Company's Annual Report on Form 10-K for the year ended December
31, 1993, are being mailed to shareowners beginning on September
27, 1994.
On December 2, 1992, Centel Corporation (Centel) shareowners
approved an Agreement and Plan of Merger providing for the merger
of F W Sub Inc., a wholly-owned subsidiary of Sprint Corporation
(Sprint), with and into Centel (the Merger). As a result of the
Merger, which became effective March 9, 1993, Centel became a
wholly-owned subsidiary of Sprint. Centel owns 9,000,000 shares
of common stock of the Company, which is all of the common stock
of the Company and represents approximately 97.4% of the voting
power.
Election of Directors (Item 1 on Proxy)
The Board of Directors is presently composed of seven
Directors. Seven Directors are to be elected for a term of one
year, subject to the bylaws. If any nominee declines or is
unable to serve as a Director, the accompanying proxy may be
voted by the persons named in the proxy in their discretion. All
nominees are now serving as Directors of the Company. Management
knows of no reason why any nominee would decline or be unable to
serve. The proxies designated on the proxy card intend to vote
for the election of the seven nominees listed on the following
pages unless otherwise instructed on the proxy card. These
nominees have been selected by the Board of Directors. If you do
not wish your shares to be voted for particular nominees, please
identify the exceptions in the manner provided on the proxy card.
The seven Directors who are to be elected are paid no
compensation for serving as a Director. The nominees are as
follows:
Stephen M. Bailor - Mr. Bailor, 50, is Vice President of the
Company. He also is, and since September, 1993 has been Vice
President-Financial and Local Billing Services of Sprint's
Finance Division. He has been an officer of the Company for more
than 5 years. Mr. Bailor has been a Director since March, 1993.
Don A. Jensen - Mr. Jensen, 59, is, and since September,
1993 has been, Vice President and Assistant Secretary of the
Company. He also is, and since 1975 has been, Vice President and
Corporate Secretary of Sprint. Mr. Jensen has been a Director
since March, 1993.
William E. McDonald - Mr. McDonald, 52, is, and since
September, 1993 has been, President of the North Carolina
Division of the Company. Mr. McDonald is also President of the
four other companies comprising the Mid-Atlantic Group of local
exchange companies of Sprint. From 1988 to 1993, he was
President of the two companies comprising the Eastern Group of
local exchange companies of Sprint. Mr. McDonald has been a
Director since September, 1993.
D. Wayne Peterson - Mr. Peterson, 58, is, and since
September 1993 has been, President and Chief Executive Officer of
the Company. He is also President - Local Telecommunications
Division of Sprint since August, 1993. From 1980 to 1993, Mr.
Peterson served as President of Carolina Telephone and Telegraph
Company, a subsidiary of Sprint. Mr. Peterson has been a
Director since July, 1993.
<PAGE> 2
M. Jeannine Strandjord - Ms. Strandjord, 48, is, and since
September, 1993 has been, Vice President and Treasurer of the
Company. She also is, and since 1990 has been, Senior Vice
President and Treasurer of Sprint. From 1986 to 1990, she was
Vice President and Controller of Sprint. Ms. Strandjord has been
a Director since March, 1993.
Alan J. Sykes - Mr. Sykes, 47, is, and since 1987 has been,
Vice President of Revenues of Sprint's Local Telecommunications
Division. Mr. Sykes has been a Director since March, 1993.
Dianne Ursick - Ms. Ursick, 45, is, and since March, 1993
has been, President of the Nevada Division of the Company. From
1989 to 1993, she was General Regulatory Manager of the Nevada
Division. Ms. Ursick has been a Director since September, 1993.
The Board of Directors recommends that the shareowners vote
FOR these Directors.
Proposed Amendment to the Certificate of Incorporation to Decrease the
Authorized Shares of Common Stock and Declare
Reverse Stock Split (Item 2 on Proxy)
The Board of Directors has proposed that the Certificate of
Incorporation of the Company be amended to decrease the
authorized shares of its common stock from 10,000,000 shares
without par value to 2,250,000 shares without par value and to
decrease the total number of shares of all classes of stock which
the Company shall have authority to issue by a corresponding
number.
Subject to the approval of the Shareowners, the Board of
Directors of the Company has also declared a 1 - for - 4 reverse
stock split of the Company's common stock, to be effective on
effectiveness of the proposed amendment reducing the authorized
shares of common stock. If the amendment to the Certificate of
Incorporation decreasing the authorized shares of common stock is
adopted, the reverse stock split is necessary to reduce the
number of issued and outstanding shares of common stock to the
number of authorized shares. Consequently, the two matters are
being submitted to the Shareowners as a single proposal.
Reasons for and effects of proposed Amendment and Reverse Stock
Split.
Currently, there are 9,000,000 shares of the Company's
common stock outstanding, all owned by Centel, a wholly-owned
subsidiary of Sprint. Following the reverse stock split, there
will be 2,250,000 shares of common stock outstanding, all owned
by Centel. As a consequence of the reverse stock split, Centel's
voting control of the Company will be reduced from approximately
97.4% of the shares entitled to vote to approximately 90.3% of
the voting shares.
The purpose of this proposal is to reduce the amount of
Delaware franchise taxes paid by the Company. Because Delaware
franchise taxes are based on the number of authorized shares of a
corporation, the proposed decrease in authorized shares of common
stock will save the Company $38,750 annually. The reverse stock
split will not result in any change in the amount of the
Company's common stock or retained earnings shown on the
Company's financial statements.
Vote required for adoption of the Amendment decreasing the
Authorized Shares of Common Stock and the Reverse Stock Split.
Adoption of the amendment to the Certificate of
Incorporation to decrease the number of authorized shares of the
Company's common stock and the proposed reverse stock split
requires the affirmative vote of the holders of a majority of the
Company's outstanding shares entitled to vote at the 1994 Annual
Meeting, voting without regard to class, and the affirmative vote
of the holders of a majority of the outstanding shares of the
Company's common stock, voting as a class. Centel intends to
vote all 9,000,000 shares of the Company's common stock which it
holds in favor of the proposed amendment and reverse stock split,
thus ensuring adoption of the proposal.
The Board of Directors recommends a vote FOR the proposed
Amendment and Reverse Stock Split.
<PAGE> 3
Proposed Amendment to the Certificate of Incorporation to Decrease
the Authorized Shares of Cumulative Preferred Stock (Item 3 on Proxy)
The Board of Directors has proposed that the Certificate of
Incorporation of the Company be amended to decrease the
authorized shares of cumulative preferred stock from 972,399
shares without par value to the number of shares of cumulative
preferred stock issued and outstanding on September 8, 1994, the
record date for the 1994 Annual Meeting of Shareowners, and to
decrease the total number of shares of all classes of stock which
the Company shall have authority to issue by a corresponding
number. The proposed amendment would also decrease the
authorized shares of each series of the cumulative preferred
stock issued and outstanding to the number of shares of such
series issued and outstanding on the record date.
Reasons for and effects of proposed Amendment.
As of the record date, there were issued and outstanding
33,445 shares of Cumulative Preferred Stock, $2.50 Dividend
Series, 144,975 shares of Cumulative Preferred Stock, $1.24
Dividend Series, 3,410 shares of Cumulative Preferred Stock,
$5.00 Dividend Series, and 25,200 shares of Cumulative Preferred
Stock, $4.70 Dividend Series, or a total of 207,030 shares of
Cumulative Preferred Stock. There are currently authorized
35,000 shares of Cumulative Preferred Stock, $2.50 Dividend
Series, 144,975 shares of Cumulative Preferred Stock, $1.24
Dividend Series, 4,852 shares of Cumulative Preferred Stock,
$5.00 Dividend Series, and 26,400 shares of Cumulative Preferred
Stock, $4.70 Dividend Series. There are an additional 761,172
authorized shares of Cumulative Preferred Stock that can be
issued in one or more other series as determined by the Board of
Directors.
The proposed amendment would reduce the authorized shares of
Cumulative Preferred Stock from 972,399 shares to 207,030 shares,
the authorized shares of Cumulative Preferred Stock, $2.50
Dividend Series, from 35,000 shares to 33,445 shares, the
authorized shares of Cumulative Preferred Stock, $5.00 Dividend
Series, from 4,852 shares to 3,410 shares, the authorized shares
of Cumulative Preferred Stock, $4.70 Dividend Series, from 26,400
shares to 25,200 shares, and the total number of shares of all
classes of stock which the Company has authority to issue by
765,369 shares. It will not affect the authorized shares of
Cumulative Preferred Stock, $1.24 Dividend Series.
The reduction in the number of authorized shares of each
individual series is necessary in order for the aggregate of the
authorized shares of all such series to equal, and not exceed,
the total authorized shares of cumulative preferred stock.
Like the proposal to reduce the authorized shares of the
Company's common stock, the purpose of this proposal is to reduce
the amount of Delaware franchise taxes paid by the Company. The
reduction in authorized shares of cumulative preferred stock
effected by the amendment will save the Company approximately
$3,800 annually in Delaware franchise taxes. Adoption of this
proposal will not change the amount of the Company's preferred
stock shown on its financial statements.
Vote required for adoption of the Amendment decreasing the
Authorized Shares of Cumulative Preferred Stock.
Adoption of the amendment to the Certificate of
Incorporation to decrease the number of authorized shares of
cumulative preferred stock requires the affirmative vote of the
holders of a majority of the Company's outstanding shares
entitled to vote at the 1994 Annual Meeting, voting without
regard to class, and the affirmative vote of the holders of a
majority of the outstanding shares of cumulative preferred stock,
voting as a class.
Centel intends to vote all 9,000,000 shares of the Company's
common stock which it holds in favor of the proposed amendment,
thus ensuring that the proposal will receive the affirmative vote
of the holders of a majority of the Company's outstanding voting
shares, voting without regard to class. The holders of a
majority of the outstanding shares of cumulative preferred stock
must also vote in favor of the proposed amendment for it to be
adopted.
The Board of Directors recommends a vote FOR the proposed
Amendment.
<PAGE> 4
Proposed Amendment to the Certificate of Incorporation
to Decrease the Authorized Shares of Convertible
Junior Preferred Stock (Item 4 on Proxy)
The Board of Directors has proposed that the Certificate of
Incorporation of the Company be amended to decrease the
authorized shares of convertible junior preferred stock from
53,304 shares without par value to the number of shares of
convertible junior preferred stock issued and outstanding on
September 8, 1994, the record date for the 1994 Annual Meeting of
Shareowners, and to decrease the total number of shares of all
classes of stock which the Company shall have authority to issue
by a corresponding number.
Reasons for and effects of proposed Amendment.
As of the record date, the Company had outstanding 33,438
shares of convertible junior preferred stock. The proposed
amendment would therefore reduce the authorized shares of
convertible junior preferred stock from 53,304 shares to 33,438
shares and would also reduce the total number of shares of all
classes of stock which the Company has authority to issue by
19,866 shares.
Like the previous two proposals (i.e., items 2 and 3 on the
proxy), the purpose of this proposal is to reduce the amount of
Delaware franchise taxes paid by the Company. The reduction in
authorized shares of convertible junior preferred stock effected
by the amendment will save the Company approximately $100
annually in Delaware franchise taxes. Adoption of this proposal
will not change the amount of the Company's preferred stock shown
on its financial statements.
Vote required for adoption of the Amendment decreasing the
Authorized Shares of Convertible Junior Preferred Stock.
Adoption of the amendment to the Certificate of
Incorporation to decrease the number of authorized shares of
convertible junior preferred stock requires the affirmative vote
of the holders of a majority of the Company's outstanding shares
entitled to vote at the 1994 Annual Meeting, voting without
regard to class, and the affirmative vote of the holders of a
majority of the outstanding shares of convertible junior
preferred stock, voting as a class.
Centel intends to vote all 9,000,000 shares of the Company's
common stock which it holds in favor of the proposed amendment,
thus ensuring that the proposal will receive the affirmative vote
of the holders of a majority of the Company's outstanding voting
shares, voting without regard to class. The holders of a
majority of the outstanding shares of convertible junior
preferred stock must also vote in favor of the proposed amendment
for it to be adopted.
The Board of Directors recommends a vote FOR the proposed
Amendment.
Beneficial Ownership of Shares of Directors and Executive Officers
The following table sets forth information as of December
31, 1993, with respect to the shares of Sprint common stock owned
by each current Director, each of the executive officers named in
the executive compensation tables, and by all Directors and
executive officers as a group. No Director or executive officer
owns any equity security of the Company.
<PAGE> 5
<TABLE>
<CAPTION>
Sprint Common Stock
Name of Individual or Beneficially Owned <F1>
Identity of Group Number of Shares
<S> <C>
Stephen M. Bailor 46,853 <F2>
John P. Frazee, Jr. 31,681 <F3>
Don A. Jensen 35,358 <F2>
William E. McDonald 63,249 <F2>
D. Wayne Peterson 88,487 <F2>
M. Jeannine Strandjord 43,013 <F2>
Alan J. Sykes 24,678 <F2><F3>
Dianne Ursick 23,979 <F2>
All Directors and executive officers
as a group (13 persons) 639,604 <F2><F4>
___________
Notes:
<FN>
<F1> Unless otherwise noted, the persons for whom the information
is provided had sole voting and investment power over the
shares of stock shown as beneficially owned.
<F2> Includes shares which may be acquired upon the exercise of
stock options exercisable on or within 60 days after
December 31, 1993, under Sprint's stock option plans as
follows: 37,367, 17,764, 43,000, 60,950, 31,750, 19,500 and
1,233 shares for Mr. Bailor, Mr. Jensen, Mr. McDonald, Mr.
Peterson, Ms. Strandjord, Mr. Sykes and Ms. Ursick,
respectively, and 433,490 shares for all Directors and
executive officers as a group.
<F3> Includes shares held by or for the benefit of family members
in which beneficial ownership has been disclaimed: 704
shares owned by Mr. Frazee's wife and 4,377 shares held by
Mr. Frazee as custodian for his children, and 86 shares held
by Mr. Sykes as custodian for his son.
<F4> Represents less than 1% of class.
</TABLE>
Meetings and Committees
Prior to April 1, 1993, when the Board of Directors
eliminated all Board committees, there were six standing
committees of the Board, including an Audit Committee, an
Executive Committee, a Finance Committee, a Compensation
Committee, an Investment Committee and a Public Policy Committee.
On September 28, 1993, the Board established two new committees
which have all the powers of the Board, with certain exceptions,
to take action between meetings of the Board. The Executive
Committee of the Nevada Division has such powers with respect to
the business and property of the Nevada Division and the
Executive Committee of the North Carolina Division has such
powers with respect to the business and property of the North
Carolina Division.
The Board of Directors of the Company held two meetings
during 1993. Prior to the Merger, Directors not employed as
officers of the Company or Centel received basic annual
compensation of $25,000. In addition, if he or she was an
outside Director, the vice chairman of the Executive Committee
received $20,000 and the chairman of each other committee
received $2,500. Outside Directors received an additional $1,000
for each meeting attended and $750 for each telephonic meeting.
Prior to the Merger, outside Directors could defer their
compensation and elect to have amounts deferred earn interest at
the prime rate compounded quarterly, or be converted into units
equivalent to shares of Centel common stock. Deferred amounts
would be paid following termination of service as a Director or,
upon election, prime rate accounts would be paid in the fifth
year following the deferral election.
Outside Directors who retired after age 65 received an
annual retirement benefit equal to the basic annual rate of
compensation then in effect (a) for life, if the outside Director
served for 10 or more years, or (b) for the number of full
quarters served by the outside Director, if less than 10 years.
<PAGE> 6
Executive Compensation
The following tables set forth the annual compensation of
the two individuals who served as Chief Executive Officer during
1993 and the other executive officers of the Company who earned
at least $100,000 in salary and bonus for services to the Company
during 1993 (the Named Officers).
Summary Compensation Table
The following table reflects the cash and non-cash
compensation for the Named Officers. Annual salary and bonus
amounts shown are amounts allocated to the Company by Sprint, or
by Centel prior to the Merger. The individuals designated as
Named Officers also had responsibilities during 1993 relating to
Sprint, Centel and other subsidiaries of Sprint and Centel.
Except for amounts shown in the "Salary" and "Bonus" columns, the
compensation stated reflects all compensation earned by the
individuals in all his or her capacities with Sprint, Centel, and
their subsidiaries.
<TABLE>
<CAPTION>
Annual Compensation
____________________________________________________
Other
Annual
Compen-
Name and Principal sation
Position Year Salary($) Bonus($) ($)<F1>
_______________________ ____ _________ ________ ____________
<S> <C> <C> <C> <C>
John P. Frazee, Jr.<F3> 1993 98,738 0 150,704 <F4>
Chief Executive 1992 394,927 431,055 570,805
Officer 1991 337,453 443,080 -------
D. Wayne Peterson<F5> 1993 27,985 19,762 24,166 <F6>
Chief Executive
Officer
Dianne Ursick<F7> 1993 74,808 41,156 4,587
President
Nevada Division
<CAPTION>
Long-Term Compensation
___________________________________
Awards Payouts
________________________ ________
Securities
Restricted Underly-
Stock ing LTIP
Name and Principal Award(s) Options/ Payouts
Position Year ($) SARs ($)
(#)
_______________________ ____ __________ __________ ________
<S> <S> <C> <C> <C>
John P. Frazee, Jr.<F3> 1993 0 31,000 0
Chief Executive 1992 0 0 0
Officer 1991 0 52,000 725,072
D. Wayne Peterson<F5> 1993 372,500 <F8> 11,000 89,783
Chief Executive
Officer
Dianne Ursick<F7> 1993 0 5,000 0
President
Nevada Division
<CAPTION>
<S> <S> <C>
All
Other
Compen-
Name and Principal sation
Position Year ($)<F1><F2>
_______________________ ____ ___________
<S> <S> <C>
John P. Frazee, Jr.<F3> 1993 89,500
Chief Executive 1992 29,743
Officer 1991 ------
D. Wayne Peterson<F5> 1993 42,431
Chief Executive
Officer
Dianne Ursick<F7> 1993 6,060
President
Nevada Division
____________
Notes:
<FN>
<F1> In accordance with the transitional provisions applicable
to the revised proxy rules adopted by the Securities and
Exchange Commission (SEC), amount of Other Annual Compensation
and All Other Compensation are excluded for 1991.
<F2> Consists of the following amounts for 1993: (a) $5,053,
$5,862 and $5,612 contributed on behalf of Mr. Frazee, Mr.
Peterson and Ms. Ursick, respectively, as company
contributions under Sprint's and Centel's Retirement Savings
Plans; (b) $843 and $448 in dividends on Centel Employees'
Stock Ownership Plan shares for Mr. Frazee and Ms. Ursick,
respectively; (c) $73,311 and $34,455 in relocation expenses
for Mr. Frazee and Mr. Peterson, respectively; (d) $10,293 in
contributions on behalf of Mr. Frazee under Centel's Matched
Deferred Salary Plan; and (e) $2,114 for Mr. Peterson
representing the portion of interest credits on deferred
compensation accounts under Sprint's Executive Deferred
Compensation Plan that are deemed by SEC rules to be at above-
market rates.
<F3> Mr. Frazee retired as Chief Executive Officer of the Company
on August 1, 1993.
<F4> Includes the cost of providing tax and financial services
of $12,500 and personal use of corporate aircraft of $16,800.
<F5> Mr. Peterson first became an executive officer of the
Company on September 28, 1993.
<F6> Includes $12,500 in automobile allowance and $4,854 in
telephone concessions.
<F7> Ms. Ursick first became an executive officer of the Company
on March 9, 1993.
<F8> The value of the restricted stock shown is based on the closing
price of Sprint common stock on October 20, 1993, the date of
the grant. As of December 31, 1993, Mr. Peterson held 10,000
restricted shares valued at $347,500, based on the closing price
of Sprint common stock on December 31, 1993, equal to $34.75.
Mr. Peterson has the right to vote and receive dividends on
<PAGE> 7
the restricted shares. Twenty-five percent of the award
vests on July 12, 1996, 25% on July 12, 1997, and 50% on
July 12, 1998.
</TABLE>
Option Grants
The following table summarizes options granted to the Named
Officers during 1993 for the purchase of shares of Sprint common
stock under Sprint's stock option plans. The option grants
relate to compensation earned by the Named Officers for all
responsibilities with Sprint, Centel and their subsidiaries. The
amounts shown as potential realizable values on these options are
based on arbitrarily assumed annualized rates of appreciation in
the price of Sprint common stock of five percent and ten percent
over the term of the options, as set forth in SEC rules. The
Named Officers will realize no gain on these options without an
increase in the price of Sprint common stock. No stock
appreciation rights were granted during 1993.
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
% of Total
Number of Options
Securities Granted to Exercise or
Underlying Options Employees in Base Price
Name Granted (#)<F1> Fiscal Year ($/Sh)
<S> <C> <C> <C>
John P. Frazee, Jr. 31,000 1.9140 $30.81250
D. Wayne Peterson 11,000 0.6791 $30.81250
Dianne Ursick 5,000 0.3097 $39.81250
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Name Expiration Option Term <F2>
Date 0% 5% 10%
_________________________________________
<S> <C> <C> <C> <C>
John P. Frazee, Jr. 03/09/03 $0.00 $600,712.29 $1,522,322.88
D. Wayne Peterson 03/09/03 $0.00 $213,155.97 $540,179.00
Dianne Ursick 03/09/03 $0.00 $96,889.08 $245,535.95
_____
Notes:
<FN>
<F1> Twenty-five percent of the grants shown became
exercisable on March 9, 1994, and an additional 25% become
exercisable on March 9 of each of the three successive years.
The options each have a reload feature. A reload option is
an option granted when an optionee exercises a stock option
and makes payment of the purchase price using shares of
previously owned Sprint common stock. A reload option is
granted for the number of shares equal to the number of shares
utilized in payment of the purchase price and tax withholding,
if any. The option price for a reload option is equal to the
market price of Sprint common stock on the date of exercise of
the original option. The expiration date of a reload option
is the same as the expiration date of the option that was
exercised. A reload option becomes exercisable one year from
the date the original option was exercised, provided the
shares acquired on the exercise of the original option are
held by the optionee for at least six months. The reload
feature is designed to encourage early exercise of options,
without foregoing the opportunity for further appreciation,
and to promote retention of the Sprint common stock acquired.
<F2> The dollar amounts in these columns are the result of
calculations at the five percent and ten percent rates set by
the SEC and are not intended to forecast future appreciation
of Sprint common stock.
</TABLE>
Option Exercises and Fiscal Year-End Values
The following table summarizes the net value realized on the
exercise of options in 1993, and the value of the outstanding
options at December 31, 1993, for the Named Officers.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and FY-end Option Values
<CAPTION>
Shares Acquired Value Realized
Name on Exercise(#) <F1>($)
<S> <C> <C>
John P. Frazee, Jr. 564,525 9,619,681
D. Wayne Peterson 0 0
Dianne Ursick 15,173 223,947
<CAPTION>
Number of Securities
Underlying Unexercised
Options at 12/31/93
_________________________________
Exercisable Unexercisable
Name (#) (#)
<S> <C> <C>
John P. Frazee, Jr. 0 0
D. Wayne Peterson 53,200 27,000
Dianne Ursick 1,233 5,000
<CAPTION>
Value of Unexercised
In-the-Money
Options at 12/31/93<F2>
_________________________________
Exercisable Unexercisable
Name ($) ($)
<S> <C> <C>
John P. Frazee, Jr. 0 0
D. Wayne Peterson 738,554 166,766
Dianne Ursick 6,170 19,375
<PAGE> 8
__________
Notes:
<FN>
<F1> The value realized upon exercise of an option is the
difference between the fair market value of the shares of
Sprint common stock received upon the exercise, valued on the
exercise date, and the exercise price paid.
<F2> The value of unexercised, in-the-money options is the
difference between the exercise price of the options and the
fair market value of Sprint common stock at 12/31/93
($34.6875).
</TABLE>
Long-Term Incentive Plan Awards
The following table represents potential awards to the Named
Officers (relating to all their responsibilities with Sprint,
Centel and their subsidiaries) under Sprint's long-term incentive
plan which, subject to Sprint's right to amend the plan at any
time prior to the approval of payouts by the Organization and
Compensation Committee of Sprint's Board of Directors, can be
earned by the achievement of certain financial objectives over
the three year period ending December 31, 1995. Payouts of
awards (which represent items of compensation attributable to
Sprint as a whole) are tied to achieving certain non-financial
business objectives for the local Operating Telephone Company and
specified levels of performance criteria, based on certain
financial objectives, within the Long Distance Division (LDD),
the Local Telecommunications Division (LTD), the local Operating
Telephone Company (OTC) and the Cellular Division (CD). The
relative weight given to the performance criteria of these
divisions in computing an executive's payout is based on the
executive's responsibilities with Sprint.
The portion of the payout applicable to the LDD is tied to
achieving specified levels of operating margin and net
collectible revenue growth. The target amount will be earned if
100% of the targeted levels of such criteria is achieved. The
threshold amount will be earned with the achievement of 85% of
the operating margin target and 83% of the revenue growth target
and the maximum award will be earned at achieving 114% of the
operating margin target and 146% of the revenue growth target.
An award payout will not be earned for the portion of the payout
applicable to the LDD criteria for performance below the
threshold.
The portion of the payout applicable to the LTD and the OTC is
tied to achieving specified levels of earnings before interest,
taxes and depreciation as a percent of net revenues (EBITD), and
return on assets (ROA). The target amount will be earned if 100%
of the targeted level of such criteria is achieved. The
threshold amount will be earned with the achievement of 95% of
the ROA target and 97% of the EBITD target and the maximum award
will be earned at achieving 103% of the ROA target and 104% of
the EBITD target. An award payout will not be earned for the
portion of the payout applicable to the LTD or the OTC criteria
for performance below the threshold.
The portion of the payout applicable to the CD is tied to
achieving specified levels of operating income and net
collectible revenue. The target amount will be earned if 100% of
the targeted level of such criteria is achieved. The threshold
amount will be earned with the achievement of 70% of the
operating income target and 90% of the revenue target and the
maximum award will be earned at achieving 130% of the operating
income and revenue targets. An award payout will not be earned
for the portion of the payout applicable to the CD criteria for
performance below the threshold.
The portion of the payout applicable to the OTC nonfinancial
business objectives is tied to efforts and results in the
regulatory area and in improvements in employee attitude survey
results.
The calculated payout, based on the achievement of the above
financial criteria, is adjusted (increased or decreased) by the
percent change in the market price of Sprint common stock as
determined by the change in the average of the high and low prices on
January 1, 1993 and December 31, 1995. If stock price increases over
the three-year performance period, the payout is adjusted by the
percentage increase in stock price. Conversely, if the stock price
decreases over the three-year performance period, the payout is
reduced by the percentage decrease in stock price. Upon approval of
the payouts by the Organization and Compensation Committee, a portion
of each payout will be paid in Sprint common stock, based on the market
value of Sprint common stock on the date of such approval,
<PAGE> 9
and the remaining portion in cash. Currently the payouts are
made 55% in Sprint common stock and 45% in cash to meet tax
withholding requirements.
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
<CAPTION>
Estimated Future Payouts
under Non-Stock Price Based Plans<F1>
_____________________________________
Performance
or Other
Period Until
Maturation or Threshold Target Maximum
Name Payout ($) ($) ($)
<S> <C> <C> <C> <C>
D. Wayne Peterson 1/1/93-12/31/95 $43,964 $106,580 $161,202
Dianne Ursick 1/1/93-12/31/95 $19,058 $28,940 $32,515
_________
<FN>
<F1> Awards are based on a percentage of the Named
Officers' average base salary midpoint over the three-year
performance cycle which ends December 31, 1995. In
calculating the average base salary midpoint, the table
assumes the base salary midpoint for 1995 will equal the 1994
base salary midpoint. In addition, the estimated future
payouts shown assume that the average of the high and low
price of Sprint common stock on December 31, 1995 will be the
same as it was on January 1, 1993. Mr. Peterson and Ms.
Ursick were the only Named Officers to receive an award under
the Long-Term Incentive Plan.
</TABLE>
Compensation Committee Report on Executive Compensation
Prior to the Merger in March of 1993, decisions regarding
the compensation of the executive officers of the Company were
made by the Compensation Committee of the Board of Directors of
Centel subject, in certain cases, to review by the Board of
Directors of Centel. In connection with the Merger, all members
of Centel's Compensation Committee resigned from the Board of
Directors of Centel and the committee was eliminated.
All of the Company's executive officers at December 31,
1993, received compensation reflecting their contributions to the
entire Sprint organization. (The portion of compensation that
was attributable to the executive officers' services to the
Company was allocated to the Company in accordance with
regulatory standards.) Most decisions regarding the post-Merger
compensation of executive officers of the Company were made by
the Organization and Compensation Committee of the Board of
Directors of Sprint (the Committee). Accordingly, the Committee
is furnishing the following report on executive compensation.
The principal responsibilities of the Committee, as they
relate to the Company, are to: (a) assess and appraise the
performance of executive management; (b) recommend to the Board
of Directors of Sprint base salaries, incentive compensation and
other benefits for the key officers; (c) counsel and advise
management on plans for orderly development and succession of
executive management; (d) take any and all action required or
permitted to be taken by the Board of Directors under the stock
option and restricted stock plans, stock purchase plans,
incentive compensation plans and the deferred compensation plans
of Sprint in which executives of the Company participate; and (e)
review recommendations for major changes in compensation and
benefit and retirement plans which have application to
significant numbers of Sprint's and its subsidiaries' total
employees and which require review or approval of Sprint's Board
of Directors.
Sprint's compensation philosophy is to link, by using
specific objectives, executives' compensation to the short-term
and long-term performance of Sprint and its subsidiaries so as to
maximize long-term Shareowner value. Sprint's executive
compensation program consists of four elements: (1) base salary,
(2) short-term incentive compensation, (3) long-term incentive
compensation and (4) stock options. To develop a competitive
compensation package, both base salary and total compensation
(i.e., the sum of all four elements) are compared to a defined
competitive group. This comparison group is composed of
approximately 140 companies similar to Sprint in size as measured by
<PAGE> 10
annual sales. The Committee believes that the comparison
group accurately reflects the market in which Sprint and its
subsidiaries compete for executive talent. The Committee's
policy is to target base salaries at the 50th percentile for base
pay of similar positions within the comparison group, and total
compensation at the 75th percentile provided certain performance
objectives are achieved.
Base Salary. Each year the Committee makes a recommendation
to the Board establishing base pay for all executive officers of
Sprint and most of its subsidiaries, including the Company.
Merit increases are based on individual performance over the
previous year and are consistent with the policy to pay base
salaries approximating the median of the comparison group.
Short-Term Incentive Plans. Most of the Company's executive
officers received their entire short-term incentive compensation
under Sprint's Management Incentive Plan. Certain executives
received all or a portion of their short-term incentive
compensation under Centel's Management Incentive Plan. A
description of each plan follows:
Sprint's Management Incentive Plan is a performance-driven
short-term, annual incentive plan designed to promote the near-
term objectives of the organization. Target incentive
opportunity is established as a percentage of salary range
midpoint and is based on job level and potential impact on
organization results. Seventy-five percent of the payout was
based on the achievement of six financial objectives -- two for
each of the Local Telecommunications Division (LTD), the Long
Distance Division (LDD) and the Cellular Division (CD). For each
objective, targets were established and compared to actual 1993
financial results. The relative weights assigned to the
objectives depended on an executive's responsibilities with
Sprint.
- - The objectives for the LTD related to operating income and
cash generation. Actual results were 105.3% of target for
operating income and 107.3% of target for cash generation.
- - The objectives for the LDD related to operating income and
net collectible revenue growth relative to market growth. Actual
results were 115.9% of target for operating income and 207.6% of
target for net collectible revenue growth.
- - The objectives for the CD related to net collectible revenue
and adjusted operating income as a percent of net revenues
(referred to as the "adjusted operating ratio"). Actual results
were 106.6% of target for net collectible revenue and 103.4% of
target for the adjusted operating ratio.
Twenty-five percent of the Sprint plan payout was based on
the achievement of certain personal objectives in 1993. These
personal objectives included qualitative factors relating to
business unit and departmental results of a nonfinancial
nature, the support the executive provided in furthering
strategic and tactical objectives, contributing to the
progress of the quality improvement process, and individual
professional growth and development.
Centel's Management Incentive Plan (Centel MIP) has
been a performance-driven short-term incentive plan designed to
promote the near term objectives of the organization. It has
been intended to provide opportunities for executives to earn
total annual cash compensation (base salary plus incentive) at
60th to 75th percentile competitive levels relative to companies
in general industry whose revenues are similar in amount. Target
incentive opportunity has been expressed as a percentage of
targeted salary level. These competitive target incentive levels
were achieved only if targeted performance goals were met.
<PAGE> 11
Centel MIP payouts can vary from 0% to 130% of the target
incentive based on performance relative to a combination of
measures. For 1993, performance was measured in the following
manner.
<TABLE>
<CAPTION>
Performance Performance
Category Weight Measure
<S> <C> <C>
Consolidated 10% Composite Division (LDD,
LTD, CD)
Business Unit 40% Operating Telephone Company
Operating Income
Cash Generation
Individual 50% Contribution to Financial
performance
Human resources accomplishments
Planned job accomplishments
Response to unplanned events
</TABLE>
Long-Term Incentive Plan. Sprint's Long-Term Incentive Plan
(LTIP) is a three-year performance-driven incentive plan designed
to promote the long-term objectives of the organization. Key
employees who are in a position to make a substantial
contribution to the accomplishment of the long-term strategic and
financial objectives of the organization are eligible to
participate. Target incentive opportunity is established as a
percentage of the three-year average salary range midpoint and is
based on job level and potential impact on organization results.
Unlike the short-term incentive payouts which were based
partly on achievement of an executive's personal objectives, the
entire LTIP payouts were based on the achievement of financial
objectives. These financial objectives related to the LTD and
the LDD. The CD was acquired with the Merger and was not
included in the LTIP criteria for the three-year period from
January 1, 1991 to December 31, 1993. Beginning with the
performance period January 1, 1993 to December 31, 1995, the CD
will be included in the LTIP. The relative weights assigned to
the LTIP objectives depended on an executive's responsibilities
with Sprint.
- - The objectives for the LTD related to return on assets (ROA)
and earnings before interest, income taxes and depreciation as a
percent of revenues (EBITD). Actual results were 103.1% of
target for ROA and 103.8% of target for EBITD.
- - The objectives for the LDD related to growth in the
consolidated earnings before interest and income taxes over 1992
and 1993 (Earnings) and 1993 net collectible revenue (Revenue).
Actual results were 92.6% of target for Earnings and 102.1% for
Revenue.
The Committee believes these four objectives have been key
determinants of Sprint's stock price over time.
The specific amounts of the LTIP payouts were determined by
comparing actual financial results to the pre-established targets
for each objective. The payout was also adjusted by a stock
price factor under which the payout based on financial objectives
as described above was multiplied by a fraction, the numerator of
which was the market price of Sprint common stock on December 31,
1993 and the denominator of which was the market price on January
1, 1991. The three-year increase in price of Sprint common stock
resulted in a multiplier of 149.6%
Stock Options. Stock option grants combined with LTIP
comprise long-term incentive compensation awarded to executive
officers of Sprint. Total long-term incentive compensation is
targeted at the 75th percentile of the comparison group. The
option price for shares of Sprint common stock issuable under
stock option plans is 100% of the fair market value of the shares
on the date of grant. Generally, 25% of the shares subject to
options granted become exercisable one year from the date of the
grant and an additional 25% of the shares become exercisable on
each of the three succeeding anniversaries. Some grants may be
subject to longer vesting schedules. If there is a change in
control of Sprint, all options outstanding for more than one year
become immediately exercisable.
<PAGE> 12
In making option grants, the Committee does not consider the
number of options already held by an executive.
Compensation of Chief Executive Officers. Mr. Frazee's
compensation was determined pursuant to an employment agreement
under which Mr. Frazee's annual salary was $415,000 for 1993.
Based on the financial results described above, Mr. Peterson
received a payment under Sprint's Management Incentive Plan of
121.8% of target and a payout under Sprint's LTIP of 138.9% of
target.
Deductibility of Compensation Under New Tax Law. Recently
enacted federal income tax legislation has limited the
deductibility, effective January 1, 1994, of compensation paid to
the chief executive officer and the other four most highly
compensated executive officers of a Company to $1 million per
executive per year. None of the Company's executive officers is
expected to exceed the deductibility limit in the foreseeable
future. The Committee intends to take action necessary to
preserve the deduction if the limitation is exceeded in future
years.
Stewart Turley, Chairman
Warren L. Batts
Joseph L. Dionne
Donald J. Hall
Robert E. R. Huntley
Linda Koch Lorimer
Retirement Pension Plans
The Centel Retirement Pension Plan was a qualified,
noncontributory plan available to certain employees of the
Company and Centel including the executive officers. On December
31, 1993, the Centel plan was merged with and into the Sprint
Retirement Pension Plan. On January 1, 1994, all employees of
the Company, including executive officers, began to accrue a
pension benefit under the Sprint plan. Prior to that date, the
pension benefit for certain executive officers of the Company,
including Mr. Frazee and Ms. Ursick, was determined under
provisions of the Centel plan.
Under the Centel plan, the benefit for service prior to 1985
(calculated as a life annuity payable upon retirement at or after
age 65) is based upon average monthly cash compensation for the
highest 60 consecutive months during the last 15 years of
credited service times 1.125% for cash compensation below $9,000
and 1.5% for cash compensation in excess of that amount.
Compensation earned prior to 1990 was used to determine the
average monthly cash compensation to be applied to service prior
to 1985. For service beginning January 1, 1985 or thereafter,
the benefit is based upon career average monthly cash
compensation subsequent to that date times 1.7% for each year of
credited service. No amounts are offset against benefits.
The Centel plan permits early retirement at or after age 55
and five years service but the benefit is reduced 3.6% for each
year prior to age 60 that benefit payments are made. Various
benefit payment options are available including joint and
survivor benefits and a 10-year certain benefit. Credited
service under the plan for Mr. Frazee is 22 years. In 1993, the
normal retirement benefit at age 65 was limited by law to
$115,641. This limit is subject to annual adjustment by the
Internal Revenue Service. Centel has adopted a Defined Benefit
Restoration Plan under which it will pay any difference between
the amount limited by law and the amount otherwise payable under
the Centel plan.
The following table shows estimated normal retirement
benefits at age 65 under the Centel Retirement Pension Plan and
Defined Benefit Restoration Plan, assuming that retirement
occurred on January 1, 1994, and that annual pay increases since
1985 have occurred at the same average annual budgeted increase
for all management employees using the annual cash compensation
(salary plus bonus) during the final year of employment.
<PAGE> 13
<TABLE>
Centel Pension Plan Table
<CAPTION>
Years of Credited Service
Final Annual Cash _____________________________________________
Compensation 10 20 30 40
<S> <C> <C> <C> <C>
$200,000 $26,586 $48,483 $70,380 $92,276
400,000 53,240 97,371 141,502 185,633
600,000 79,894 146,259 212,624 278,989
800,000 106,548 195,147 283,746 372,345
1,000,000 133,202 244,035 354,868 465,701
1,200,000 159,855 292,923 425,990 559,058
</TABLE>
Under the Sprint plan, employees earn a benefit for services
beginning after 1993 equal to 1.5% of actual yearly salary and
bonus. For each year of service prior to 1994, employees earn a
benefit equal to 1.5% of average pay for the five years ending in
1993.
Prior to 1990, the Sprint plan provided pension benefits based
on an employee's five highest consecutive years' compensation in
the last ten years before retirement. The benefit was determined
by taking 1.2% of the average compensation over such five year
period plus .35% of such average compensation in excess of a
certain amount ($22,200 in 1994) and multiplying the result by
the individual's years of credited service. Employees who retire
before the year 2000 will have their pension benefit calculated
under both the new and old formulas and will receive the greater
of the two benefits. Because the benefit for Mr. Peterson is
expected to be greater under the old formula, the table below
reflects the estimated annual pension benefit payable to an
individual retiring in 1994 at age 65 under the old formula. The
amounts include all prospective benefits under Sprint's plans,
whether tax-qualified or not. Mr. Peterson has an agreement with
Sprint that if his employment is discontinued after July 31,
1996, through no fault of his own, he will not incur any penalty
for early retirement.
<TABLE>
Sprint Pension Plan Table
<CAPTION>
Remuneration<F1> Years of Service <F2>
________________ _____________________
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$400,000 $91,835 $122,446 $153,058 $183,669 $214,281
500,000 115,085 153,446 191,808 230,169 268,531
600,000 138,335 184,446 230,558 276,669 322,781
700,000 161,585 215,446 269,308 323,169 377,031
800,000 184,835 246,446 308,058 369,669 431,281
900,000 208,085 277,446 346,808 416,169 485,531
1,000,000 231,335 308,446 385,558 462,669 539,781
__________
<FN>
<F1> Compensation, for purposes of estimating a pension
benefit, includes salary and bonus as reflected under Annual
Compensation in the Summary Compensation Table. The
calculation of benefits under the pension plans generally is
based upon average compensation for the highest five
consecutive years of the ten years preceding retirement.
<F2> These amounts are straight life annuity amounts and would
not be subject to reduction because of Social Security
benefits. For purposes of estimating a pension benefit the
years of service credited for Mr. Peterson is 26 years;
however, Mr. Peterson is entitled, subject to forfeiture, to
up to ten additional years of credited service.
</TABLE>
Ms. Ursick's pension benefit is determined primarily by a
career average formula and is not disclosed under either of the
two tables above. Assuming she continues in her current position
with the Company at current compensation levels and retires at
age 65, her annual pension benefit payable would be approximately
$84,150. This amount is a straight life annuity amount.
<PAGE> 14
Employment Contracts
Mr. Peterson has signed a non-competition agreement with
Sprint which provides, in general, that he may receive 18 months
of compensation and benefits following his involuntary
termination of employment if he does not associate himself with a
competitor during that period.
Sprint has a Key Management Benefit Plan providing for a
survivor benefit in the event of the death of a participant or,
in the alternative, a supplemental retirement benefit.
Participants are key executives of Sprint and its subsidiaries as
designated by the Chief Executive Officer of Sprint and approved
by the Organization and Compensation Committee. Under the plan,
if a participant dies prior to retirement, the participant's
beneficiary will receive ten annual payments each equal to 25% of
the participant's highest annual salary during the five-year
period immediately prior to the time of death. If a participant
dies after retiring or becoming permanently disabled, the
participant's beneficiary will receive a benefit equal to 300%
(or a reduced percentage if the participant retires before age
60) of the participant's highest annual salary during the five-
year period immediately prior to the time of retirement or
disability, payable either in a lump sum or in installments at
the election of the participant. Prior to reaching age 60 and at
least 13 months before retirement, a participant may elect a
supplemental retirement benefit in lieu of all or a portion of
the survivor benefit. The supplemental retirement benefit will
be the actuarial equivalent of the survivor benefit and will be
paid in a lump sum, in installments, or as a single life or joint
and survivor annuity, at the election of the participant. Mr.
Peterson is a participant in the plan.
Transactions with Management
DuBose Ausley, who was a Director of the Company through
March 9, 1993, is President of the law firm of Ausley, McMullen,
McGehee, Carothers & Proctor, P.A., which provided legal services
to a subsidiary of the Company in 1993 for which it billed
$403,950.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's Directors and executive officers to file
with the SEC initial reports of ownership and reports of changes
in ownership of the Company's equity securities. Directors and
executive officers are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
None of the Company's Directors and executive officers own
any equity securities of the Company. Due to an oversight, none
of these individuals filed initial reports required under Section
16(a) when they first became directors or executive officers to
report that no such securities were owned by them. As soon as
the oversight was discovered, the Company's Directors and
executive officers promptly filed the required reports.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during 1993
all Section 16(a) filing requirements applicable to its Directors
and executive officers were complied with, except for the initial
filings described in the preceding paragraph.
Independent Public Accountants
The Board of Directors and shareowners of Sprint have voted
to appoint Ernst & Young as independent auditors to examine the
financial statements of Sprint and its subsidiaries, including
the Company, for 1994. Ernst & Young first examined the
Company's financial statements last year. Representatives of
Ernst & Young will not be present at the Annual Meeting, will not
make a statement and will not be available to respond to
questions.
As a result of the Merger, Arthur Andersen & Co., which had
been the Company's auditors for many years, was dismissed;
however, Ernst & Young relied on the report of Arthur Andersen &
Co. with respect to the 1992 and 1991 consolidated financial
statements of the Company in Ernst & Young's report on the
Company's consolidated financial statements for each of the three
years in the period ended December 31, 1993. Arthur Andersen &
Co.'s reports on the Company's consolidated financial
<PAGE> 15
statements for the 1992 and 1991 fiscal years did not contain an
adverse opinion or a disclaimer of opinion, nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting
principles. During 1992 and 1991 and in any subsequent interim period
preceding the dismissal of Arthur Andersen & Co., there were no
disagreements between the Company and Arthur Andersen & Co. on any
matters of accounting principles or practice, financial statement
disclosure, or auditing scope or procedure which, if not resolved
to the satisfaction of Arthur Andersen & Co., would have caused
Arthur Andersen & Co. to make reference to the matter in their
report.
Other Matters
The Board of Directors does not know of any matters to be
presented at the meeting other than those mentioned in this Proxy
Statement. If any other matters are properly brought before the
meeting, the persons named in the accompanying proxy will vote in
accordance with their best judgment.
Shares Entitled to Vote
Shareowners of record at the close of business on September
8, 1994 are entitled to vote. At that date there were
outstanding 9,000,000 shares of common stock, 207,030 shares of
cumulative preferred stock and 33,438 shares of convertible
junior preferred stock. Each share is entitled to one vote on
each matter to be voted on at the meeting. All of the shares
vote together as one class. In addition, the common stock, the
cumulative preferred stock and the convertible junior preferred
stock each vote as a class on items 2, 3 and 4 on the proxy,
respectively, as explained in the description of each such
proposal in this proxy statement. The Company's Certificate of
Incorporation provides that, except as otherwise expressly
provided in the Certificate of Incorporation or by law, a quorum
for the transaction of any business shall exist if a majority of
the shares issued, outstanding and entitled to be voted upon such
business are represented in person or by proxy at such meeting.
It also provides that, except as otherwise expressly provided in
the Certificate of Incorporation or by law, the affirmative vote
of a majority of such quorum shall suffice to adopt any measure.
Under Delaware law, where a separate vote by a class is required,
a majority of the outstanding shares of such class, present in
person or represented by proxy, shall constitute a quorum to take
action with respect to the vote on that matter, and the
affirmative vote of a majority of shares of such class present in
person or represented by proxy at the meeting shall be the act of
such class. Centel owns all of the common stock of the Company,
which represents approximately 97.4% of the voting power. Centel
intends to vote the common stock of the Company in favor of the
election as Directors of the seven aforementioned nominees and
for each of the other proposals (i.e., items 2, 3 and 4 of the
proxy). Under applicable Delaware law, in determining whether
the proposal has received the requisite number of affirmative
votes, abstentions will be counted and will have the same effect
as a vote against the proposal. "Broker non-votes", which occur
when brokers are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting
instructions, are not counted for the purpose of determining the
number of shares present in person or represented by proxy on a
voting matter and have no effect on the outcome of the vote.
Voting
Shareowners may vote at the meeting by voting in person, by
completing and returning the enclosed proxy to the Company's
agent prior to the meeting, or by submitting a signed proxy at
the meeting.
Proxies
Please mark your votes, sign and date your proxy and return
it promptly in the addressed envelope which is enclosed. The
proxy will be used at the 1994 Annual Meeting of Shareowners and
any adjournments. A shareowner may revoke a proxy at any time
before it is voted by giving written notice of revocation to the
Secretary of the Company, by submitting a proxy bearing a later
date or by attending the meeting and voting in person.
A shareowner may withhold votes from any nominee by marking
the proxy to that effect.
The cost of solicitation of proxies will be borne by the
Company.
<PAGE> 16
Shareowner Proposals for the 1995 Annual Meeting
Any shareowner who desires to present a proposal at the 1995
Annual Meeting and have it included in the Company's proxy
statement and proxy must submit it in writing to the Company, at
the address set forth on the first page of this Proxy Statement,
a reasonable time before the solicitation is made for such
meeting, preferably not later than December 31, 1994.
By order of the Board of Directors
Marion W. O'Neill
Secretary
<PAGE>
PRELIMINARY COPY
Central Telephone Company
c/o FIRST CHICAGO TRUST COMPANY OF NY
MAIL SUITE 0123
PO BOX 1762
CHICAGO, IL 60690-9947
This Proxy is solicited by the Board of Directors of Central
Telephone Company
The undersigned hereby appoints each of DON A. JENSEN, MICHAEL T.
HYDE and MARION W. O'NEILL, as Proxies, with full power of
substitution, and hereby authorizes them to represent and to vote
all the shares of Central Telephone Company stock held by the
undersigned of record at the close of business on September 8,
1994, at the Annual Meeting of Shareowners to be held on November
3, 1994, and any adjournment thereof.
In their discretion, the Proxies are authorized to vote on such
other business as may properly come before the meeting.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting and any adjournments thereof.
This proxy is revocable at any time before it is exercised, the
signer retaining the right to attend the meeting and vote in
person.
This proxy when properly executed will be voted in the manner
directed herein. If no direction is made, this proxy will be
voted FOR the election of directors and FOR Proposals 2, 3, and
4.
A majority of said proxies, or any substitute or substitutes, who
shall be present and act at the meeting (or if only one shall be
present and act, then that one) shall have all the powers of said
proxies hereunder.
You are encouraged to specify your choices by marking the
appropriate boxes, but you need not mark any boxes if you wish to
vote FOR the election of all nominees and proposals. The Proxies
cannot vote your shares unless you sign and return this card.
1. Election of Directors.
___ FOR ___ WITHHELD
For, except vote WITHHELD from the following nominee(s):
_______________________________________________
Nominees: Stephen M. Bailor, Don A. Jensen, William E. McDonald,
D. Wayne Peterson, M. Jeannine Strandjord, Alan J. Sykes, Dianne
Ursick
2. To approve an amendment to the FOR ___ AGAINST ___ ABSTAIN ___
Certificate of Incorporation
decreasing the authorized shares
of Common Stock and to approve a
reverse stock split.
3. To approve an amendment to the FOR ___ AGAINST ___ ABSTAIN ___
Certificate of Incorporation
decreasing the authorized shares
of Cumulative Preferred Stock.
4. To approve an amendment to the FOR ___ AGAINST ___ ABSTAIN ___
Certificate of Incorporation
decreasing the authorized shares
of Convertible Junior Preferred
Stock.
NOTE: Please sign exactly as name
appears hereon. If shares are held
jointly, any one of the joint owners
may sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
_____________________________ ______________________
Signature(s) Date
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
