<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 7, 1994
REGISTRATION NO. 33-52117
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LINCOLN TELECOMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEBRASKA 47-0632436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1440 M STREET
LINCOLN, NEBRASKA 68508
(402) 474-2211
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
MICHAEL J. TAVLIN
VICE PRESIDENT -- TREASURER AND SECRETARY
LINCOLN TELECOMMUNICATIONS COMPANY
1440 M STREET
LINCOLN, NEBRASKA 68508
(402) 474-2211
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C>
Benjamin F. Garmer, III Charles W. Mulaney, Jr.
Foley & Lardner Skadden, Arps, Slate, Meagher & Flom
777 East Wisconsin Avenue 333 West Wacker Drive
Milwaukee, Wisconsin 53202 Chicago, Illinois 60606
(414) 271-2400 (312) 407-0700
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 7, 1994
PROSPECTUS
- ----------------
2,130,000 SHARES
LINCOLN TELECOMMUNICATIONS COMPANY
COMMON STOCK
------------------
All of the shares of Common Stock of Lincoln Telecommunications Company (the
"Company") offered hereby are being sold by Sahara Enterprises, Inc. (the
"Selling Stockholder"). See "Selling Stockholder." The Company will not receive
any of the proceeds from the sale of the shares of Common Stock offered hereby.
Concurrently with the sale of the shares of Common Stock offered hereby, the
Company will purchase 250,000 shares of Common Stock from the Selling
Stockholder for future use in funding its stock obligations under one or more
Company employee benefit plans. See "Sale of Shares to Company."
The Common Stock is traded on the Nasdaq National Market under the symbol
"LTEC." On March 4, 1994, the last reported sale price of the Common Stock on
the Nasdaq National Market was $18.50 per share. See "Price Range of Common
Stock and Dividends."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT (1) STOCKHOLDER (2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total (3)................................. $ $ $
<FN>
(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(2) Before deducting offering expenses payable by the Selling Stockholder
estimated at $245,000. In addition, the Company will pay offering expenses
estimated at $30,000.
(3) The Selling Stockholder has granted the Underwriters a 30-day option to
purchase up to 319,500 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Selling Stockholder
will be $ , $ , and $ , respectively. See "Underwriting."
</TABLE>
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1994.
------------------------
MERRILL LYNCH & CO. DAIN BOSWORTH
INCORPORATED
------------------
The date of this Prospectus is , 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company under the Exchange Act can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material also may be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement which may be inspected and copied in the manner and at
the sources described above. Any statements contained herein concerning the
provisions of any document are not necessarily complete and in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1992.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993, June 30, 1993 and September 30, 1993.
3. The Company's Current Report on Form 8-K dated January 21, 1994.
4. The Company's Current Report on Form 8-K dated February 1, 1994.
5. The Company's Current Report on Form 8-K dated February 14, 1994, as
amended by the Company's Current Report on Form 8-K/A dated March 4, 1994.
6. The Company's Registration Statement on Form 8-A under the Exchange
Act with respect to the Common Stock Purchase Rights, including any
amendment or reports filed for the purpose of updating the description of
the Rights contained herein.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the shares of Common Stock offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus or in any subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
that have been or may be incorporated herein by reference (other than exhibits
thereto, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates). Requests should be directed
to Lincoln Telecommunications Company, 1440 M Street, Lincoln, Nebraska 68508,
Attention: Michael J. Tavlin, Vice President-Treasurer (telephone: (402)
474-2211).
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE, OR INCORPORATED BY
REFERENCE, IN THIS PROSPECTUS. ALL INFORMATION CONTAINED IN THIS PROSPECTUS
ASSUMES, UNLESS OTHERWISE INDICATED, THAT THE UNDERWRITERS' OVER-ALLOTMENT
OPTION IS NOT EXERCISED. THE NUMBER OF SHARES AND PER SHARE AMOUNTS SET FORTH IN
THIS PROSPECTUS ARE ADJUSTED TO REFLECT THE COMPANY'S 100% STOCK DIVIDEND PAID
ON JANUARY 6, 1994. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY" AS
USED IN THIS PROSPECTUS REFERS TO LINCOLN TELECOMMUNICATIONS COMPANY AND ALL OF
ITS SUBSIDIARIES.
THE COMPANY
The Company is a diversified telecommunications company which provides
telecommunications services to telephone and cellular customers in southeastern
and eastern Nebraska. Since the mid-1980's, the Company's business strategy has
been to add value to its core telephone operations by positioning itself as a
"one-stop" telecommunications service provider and to diversify into faster
growing segments of the telecommunications businesses, such as wireless
communications. The Company provides basic exchange service; long distance
service; enhanced network services, including Caller ID, Voice Mail, and
Centrex; and a full range of data communications services. The Company also
provides cellular service, directory service and communications systems and
equipment to complement the Company's core telephone services.
The Company's primary geographic market consists of 22 contiguous counties
in southeastern Nebraska where the Company is the local exchange carrier and
provides cellular and other communications services. According to the U.S.
Bureau of the Census, the population of this region exceeds 450,000. Lincoln,
the capital of Nebraska and the location of the central campus of the University
of Nebraska, is the principal urban area within this market. The population in
the Lincoln Metropolitan Statistical Area ("MSA") (which includes all of
Lancaster County in Nebraska) grew by 10.8% between 1980 and 1990 to
approximately 214,000. The Company's secondary geographic market consists of the
Omaha MSA (Douglas and Sarpy Counties in Nebraska and Pottawatamie County in
Iowa, which includes Council Bluffs) where the Company provides business
communications equipment and is the manager and 27.6% owner of the wireline
cellular licensee.
In 1986, Nebraska enacted legislation which substantially deregulated the
pricing of telecommunications services. Telecommunications companies in Nebraska
are permitted to make certain rate adjustments for services without regulatory
approval, including the ability to increase basic local exchange rates by up to
10% during any consecutive 12-month period. An increase in local exchange rates
not exceeding 10% may be subject to regulatory review if a requisite number of
subscribers protest the increase. See "Business -- Regulatory Environment."
The Company is a Nebraska corporation with its principal executive offices
at 1440 M Street, Lincoln, Nebraska, telephone number (402) 474-2211.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholder...... 2,130,000 shares
Common Stock Outstanding............................. 32,595,350 shares (1)
Nasdaq National Market Symbol........................ LTEC
Use of Proceeds...................................... The Company will not receive any of
the net proceeds from the sale of
the shares of Common Stock offered
hereby.
<FN>
- ------------------------
(1) As of December 31, 1993. Does not include options to purchase 110,650
shares of Common Stock under the Company's 1989 Stock and Incentive Plan
which were outstanding and unexercised as of such date.
</TABLE>
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1989 1990 1991 1992 1993
----------- ----------- ----------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Total operating revenues.................. $ 161,954 $ 164,665 $ 168,093 $ 175,368 $ 184,350
Operating income.......................... 41,384 41,064 49,561 51,428 56,825
Earnings before cumulative effect of
change in accounting
principle................................ 25,046 24,696 27,820 29,609 33,191
Cumulative effect of change in accounting
principle................................ -- -- -- -- (23,166)(1)
Net earnings.............................. 25,046 24,696 27,820 29,609 10,025
Per share of Common Stock:
Earnings before cumulative effect of
change in accounting principle......... .74 .73 .83 .90 1.01
Net earnings............................ .74 .73 .83 .90 .30
Dividends declared...................... .37 .37 .40 .43 .49
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
1993
------------
<S> <C>
BALANCE SHEET DATA:
Total assets..................................................................................... $ 395,279
------------
------------
Capitalization:
Long-term debt................................................................................. 44,000
5% redeemable preferred stock.................................................................. 4,499
Common stock investment........................................................................ 184,032
------------
Total capitalization......................................................................... $ 232,531(2)
------------
------------
<FN>
- ------------------------
(1) Effective January 1, 1993, the Company adopted FASB No. 106 and recorded
the costs (net of income taxes) of post-retirement benefits other than
pensions.
(2) Does not reflect the adjustment for the sale of 250,000 shares of Common
Stock by the Selling Stockholder to the Company for future use in funding
its stock obligations under one or more Company employee benefit plans.
See "Capitalization."
</TABLE>
4
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The following table sets forth the reported high and low sales prices of the
Common Stock on the Nasdaq National Market for the periods indicated and the
cash dividends declared per share during such periods. The prices and dividend
amounts have been adjusted to reflect the Company's 100% stock dividend paid on
January 6, 1994.
<TABLE>
<CAPTION>
SALES PRICES
-------------------- CASH
HIGH LOW DIVIDENDS
--------- --------- -----------
<S> <C> <C> <C>
1992
First Quarter....................................................... $ 14.25 $ 11.63 $ .10
Second Quarter...................................................... 13.13 10.63 .11
Third Quarter....................................................... 12.13 10.63 .11
Fourth Quarter...................................................... 13.50 11.25 .11
1993
First Quarter....................................................... 13.50 12.00 .12
Second Quarter...................................................... 14.50 12.50 .12
Third Quarter....................................................... 18.75 13.63 .12
Fourth Quarter...................................................... 20.50 17.50 .13
1994
First Quarter....................................................... 20.00 16.00 --
</TABLE>
See the cover page of this Prospectus for a recent sale price of the Common
Stock on the Nasdaq National Market.
The declaration of future cash dividends by the Company's Board of Directors
is dependent upon business conditions, the earnings and financial position of
the Company and such other matters as the Board of Directors deems relevant. The
payment of dividends by the Company is dependent upon the Company's receipt of
dividends from its subsidiaries, principally The Lincoln Telephone and Telegraph
Company ("LT&T"). The agreements relating to the long-term debt of LT&T restrict
the payment of dividends. Under the most restrictive provision of these
agreements, approximately $22 million of retained earnings of LT&T was available
for the payment of dividends as of December 31, 1993. LT&T has outstanding 5%
redeemable preferred stock which has a preferential right to payment of its
annual aggregate dividend of $224,955.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of shares
of Common Stock offered hereby.
5
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company as of December 31, 1993 and as adjusted to give effect to the sale of
250,000 shares of Common Stock by the Selling Stockholder to the Company. See
"Sale of Shares to Company."
<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------------
HISTORICAL AS ADJUSTED
----------- --------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt..................................................................... $ 41,500 $ 46,033
----------- --------------
----------- --------------
Long-term debt (1).................................................................. $ 44,000 $ 44,000
Stockholders' equity:
5% redeemable preferred stock (2)................................................. 4,499 4,499
Common stock investment........................................................... 184,032 179,499(3)
----------- --------------
Total stockholders' equity...................................................... 188,531 183,998
----------- --------------
Total capitalization.......................................................... $ 232,531 $ 227,998
----------- --------------
----------- --------------
<FN>
- ------------------------
(1) See Note 6 to Company's consolidated financial statements incorporated by
reference herein for additional information concerning the Company's
long-term debt.
(2) LT&T is the issuer of the 5% redeemable preferred stock, which preferred
stock is publicly-held. Such preferred stock is redeemable solely at the
option of LT&T.
(3) Assumes the sale of Common Stock by the Selling Stockholder to the Company
at a price of $18.13 per share (assuming a public offering price of $18.50).
See "Sale of Shares to Company."
</TABLE>
RECENT OPERATING RESULTS
Before taking into account a one-time accounting charge relating to retiree
health care benefits, the Company posted record earnings of $33.2 million or
$1.01 per share in 1993. This compared to $29.6 million or $0.90 per share in
1992. After taking into account the one-time accounting charge, the Company's
1993 year-end earnings were $10 million or $0.30 per share.
The Company's total operating revenues for 1993 were $184,350,000, an
increase of $8,982,000 or 5.1% over 1992. Telephone operating revenues, led by
growth in cellular network revenues, increased by $7,154,000 or 4.6% over 1992.
Revenues and sales from diversified operations increased by $1,303,000 or 4.9%
over 1992.
Total operating expenses were $127,525,000 in 1993, an increase of
$3,585,000 or 2.9%, which resulted in a growth in operating income of $5,397,000
or 10.5%. Income taxes increased $3,517,000 or 21.9% over 1992.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected financial data for the Company, which
has been derived from, and is qualified by reference to, the Company's
consolidated financial statements and should be read in connection with the
consolidated financial statements, related notes and other information
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Revenues and Sales:
Telephone operations................................ $ 142,872 $ 146,162 $ 149,312 $ 156,760 $ 163,914
Diversified operations.............................. 25,806 25,799 26,902 26,751 28,054
Intercompany revenues............................... (6,724) (7,296) (8,121) (8,143) (7,618)
---------- ---------- ---------- ---------- ----------
Total revenues and sales.......................... 161,954 164,665 168,093 175,368 184,350
---------- ---------- ---------- ---------- ----------
Operating Expenses:
Depreciation........................................ 27,656 28,692 28,628 29,626 28,596
Cost of goods and services.......................... 18,342 18,149 18,806 18,103 17,709
Intercompany expenses............................... (6,724) (7,296) (8,121) (8,143) (7,618)
Other............................................... 81,296 84,056 79,219 84,354 88,838
---------- ---------- ---------- ---------- ----------
Total operating expenses.......................... 120,570 123,601 118,532 123,940 127,525
---------- ---------- ---------- ---------- ----------
Operating income...................................... 41,384 41,064 49,561 51,428 56,825
Net non-operating expense(1).......................... 3,943 4,497 4,904 5,718 4,016
Income taxes.......................................... 12,395 11,871 16,837 16,101 19,618
---------- ---------- ---------- ---------- ----------
Earnings before cumulative effect of change in
accounting principle................................. 25,046 24,696 27,820 29,609 33,191
Cumulative effect of change in accounting principle... -- -- -- -- (23,166)(2)
---------- ---------- ---------- ---------- ----------
Net earnings.......................................... 25,046 24,696 27,820 29,609 10,025
Preferred dividends................................... 543 506 469 338 225
---------- ---------- ---------- ---------- ----------
Earnings available for Common Stock................... $ 24,503 $ 24,190 $ 27,351 $ 29,271 $ 9,800
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Per Share of Common Stock:
Net earnings before cumulative effect of change in
accounting principle............................... $ .74 $ .73 $ .83 $ .90 $ 1.01
Net earnings........................................ $ .74 $ .73 $ .83 $ .90 $ .30
Dividends declared.................................. $ .37 $ .37 $ .40 $ .43 $ .49
Weighted average shares outstanding................... 32,980 32,976 32,879 32,672 32,548
BALANCE SHEET DATA (AT PERIOD END):
Assets:
Net property and equipment.......................... $ 244,763 $ 250,275 $ 253,368 $ 249,565 $ 246,104
Current assets...................................... 51,886 90,476 63,452 68,659 81,751
Other assets........................................ 8,259 7,344 44,156 50,892 67,424
---------- ---------- ---------- ---------- ----------
Total assets...................................... $ 304,908 $ 348,095 $ 360,976 $ 369,116 $ 395,279
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Capitalization and Liabilities:
Capitalization:
Long-term debt...................................... $ 55,075 $ 85,794 $ 80,325 $ 73,550 $ 44,000
Preferred stock..................................... 8,179 7,699 7,219 4,499 4,499
Common stock investment............................. 153,420 164,815 177,911 189,435 184,032
---------- ---------- ---------- ---------- ----------
Total capitalization.............................. 216,674 258,308 265,455 267,484 232,531
Current liabilities................................. 38,850 41,568 50,353 53,760 74,385
Deferred credits.................................... 49,384 48,219 45,168 47,872 88,363
---------- ---------- ---------- ---------- ----------
Total capitalization and liabilities.............. $ 304,908 $ 348,095 $ 360,976 $ 369,116 $ 395,279
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<FN>
- --------------------------
(1) Includes $59,000 of loss (net of income taxes) in 1989 relating to
discontinued operations.
(2) Effective January 1, 1993, the Company adopted FASB No. 106 and recorded the
costs (net of income taxes) of accumulated post-retirement benefits other
than pensions.
</TABLE>
7
<PAGE>
BUSINESS
The Company is a diversified telecommunications company which provides
telecommunications services to telephone and cellular customers in southeastern
and eastern Nebraska. Since the mid-1980's, the Company's business strategy has
been to add value to its core telephone operations by positioning itself as a
"one-stop" telecommunications service provider and to diversify into faster
growing segments of the telecommunications businesses, such as wireless
communications. The Company provides basic exchange service; long distance
service; enhanced network services, including Caller ID, Voice Mail, and
Centrex; and a full range of data communications services. The Company also
provides cellular service, directory service and communications systems and
equipment to complement the Company's core telephone services.
The Company's primary geographic market consists of 22 contiguous counties
in southeastern Nebraska where the Company is the local exchange carrier and
provides cellular and other communications services. According to the U.S.
Bureau of the Census, the population of this region exceeds 450,000. Lincoln,
the capital of Nebraska and the location of the central campus of the University
of Nebraska, is the principal urban area within this market. The population in
the Lincoln MSA (which includes all of Lancaster County in Nebraska) grew by
10.8% between 1980 and 1990 to approximately 214,000. The Company's secondary
geographic market consists of the Omaha MSA (Douglas and Sarpy Counties in
Nebraska and Pottawatamie County in Iowa, which includes Council Bluffs) where
the Company provides business communications equipment and is the manager and
27.6% owner of the wireline cellular licensee.
In 1986, Nebraska enacted legislation which substantially deregulated the
pricing of telecommunications services. Telecommunications companies in Nebraska
are permitted to make certain rate adjustments for services without regulatory
approval, including the ability to increase basic local exchange rates by up to
10% during any consecutive 12-month period. An increase in local exchange rates
not exceeding 10% may be subject to regulatory review if a requisite number of
subscribers protest the increase. See "Business -- Regulatory Environment."
WIRELINE OPERATIONS
The Company's local exchange operations provide voice and data
communications services for residential and business customers in southeastern
Nebraska and access services, fiber facilities, and billing and collection
services to other communications companies, including long distance and cellular
companies. Measured by access line data as of December 31, 1992 provided by the
United States Telephone Association, the Company was the 19th largest local
telephone company in the United States.
The following table sets forth certain information about the Company's local
exchange operations:
ACCESS LINES IN SERVICE(1)
<TABLE>
<CAPTION>
EMPLOYEES
PER
PERCENT 10,000
DECEMBER 31, RESIDENTIAL BUSINESS TOTAL INCREASE ACCESS LINES (2)
- --------------- ----------- ----------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
1989 163,571 52,538 216,109 2.7% 69
1990 165,832 55,874 221,706 2.6% 66
1991 168,164 57,913 226,077 2.0% 65
1992 170,954 61,194 232,148 2.7% 62
1993 173,477 64,665 238,142 2.6% 60
<FN>
- ------------------------
(1) Does not include cellular subscribers.
(2) Employees used in the computation are all employees of LT&T.
</TABLE>
8
<PAGE>
Rates for basic local exchange service for residential customers range from
a low of $10.00 a month for smaller communities to a high of $12.50 a month in
Lincoln. Business rates range from a low of $33.00 for a single line in a small
community to $55.00 for a PBX line in Lincoln. In 1991, the Company, pursuant to
an order of the Nebraska Public Service Commission ("NPSC"), concluded a rate
restructuring program in which basic rates were increased to the current levels
to offset rate reductions for intraLATA long distance calling. The combined
result of this rate restructuring program was intended to be revenue neutral and
was monitored by the NPSC for 12 months following the order. Following such
monitoring period, the NPSC issued an order on February 16, 1993, intended to
accomplish revenue neutrality on an ongoing basis, as well as to refund excess
revenues LT&T earned during and following the monitoring period. Consistent with
this order, LT&T's customers received one-time credits which totalled
approximately $253,000, rates for touch call service were reduced by
approximately $464,000 annually and the Company's intraLATA long distance rates
were reduced by $1,125,000 annually. These adjustments allowed the Company to
more competitively position its rates for intraLATA long distance calling.
One of the Company's key strategies has been to deploy new technology in its
local exchange network to increase operating efficiencies and to provide a
platform for the delivery of new services to its customers. The Company has made
approximately $300 million in capital expenditures during the last ten years.
Some of the most significant capital expenditure programs include:
ALL DIGITAL SWITCHING. All of the Company's switches have been
converted to digital technology and interoffice transmission is 100% digital.
Immediate benefits from this all-digital network include faster call completion,
better transmission quality for both voice and data, reduced administration and
maintenance costs, and the ability to offer a wide variety of enhanced services,
such as custom calling and digital data services.
FIBER OPTICS. The Company has installed over 1,250 miles of fiber optic
cable, which provides for improved transmission quality, occupies less conduit
space, requires less maintenance and provides higher bandwidth for services like
video, data and voice. The Company has installed fiber optic cable in ring
configurations in its 22-county local exchange market. This configuration
provides route diversity and reduces the susceptibility of the network to
outages. One of the Company's fiber rings covers 88 square blocks in the
downtown Lincoln business area and provides large businesses and government
customers with access to a wide range of new data and video communications
services. The Company believes this fiber network will make the Company less
vulnerable to entry by competitive access providers.
SIGNALING SYSTEM 7 ("SS7"). The Company has installed SS7, an
out-of-band signaling system, to over 60% of its access lines. SS7 is a common
network "language" used by digital switches to separate telephone calls into two
parts, the voice message and the signaling message. Because the signaling
messages are sent over a separate path or "band," use of SS7 results in
shortened call set up times, more efficient use of the network and the ability
to offer new advanced services, including Caller ID, Continuous Redial, and
Enhanced 800 services.
The Company's focus has been to achieve greater market penetration for the
new products that its advanced technology makes possible. As of December 31,
1993, residential penetration of traditional custom calling features, such as
call waiting and call forwarding, was over 22%, and residential penetration of
advanced custom calling features, such as Caller ID and Continuous Redial, in
the areas where such features are available was over 10%. These penetration
rates compare with national average penetration rates of approximately 34% for
custom calling features and approximately 4% for advanced custom calling
features.
The Company has launched a variety of new services to meet business and
government customers' needs for voice and data communications. The Company's
Centrex service, once only a service for large customers, has been repositioned
with new features and benefits to make it more attractive to small and
medium-sized business users. The number of Centrex lines has grown from 15,876
to 23,039 from January 1, 1990 to December 31, 1993. In 1992, the Company also
began offering frame relay
9
<PAGE>
service, an advanced standardized switching technology that enables users to
transmit data through a public network at high speeds. Frame relay supports many
business applications, including local area network interconnection, remote
terminal to host computer connection, image transfer and file transfer.
WIRELESS SERVICES
The Company's wireless services include cellular operations and wide area
paging services. The Company's cellular businesses consist of the Lincoln and
Omaha MSAs and a Rural Service Area ("RSA") in Iowa contiguous to the Omaha MSA.
In addition, the Company holds a minority interest in Nebraska Cellular
Telephone Corporation which provides cellular service in the ten RSAs
established by the Federal Communications Commission ("FCC") in Nebraska. The
following table sets forth certain information about the Company's cellular
operations.
CELLULAR OPERATIONS
<TABLE>
<CAPTION>
DECEMBER 31, 1993
POPS --------------------------
ACQUISITION PERCENT WITHIN NET NET
SYSTEM (1) DATE (2) OWNERSHIP AREA (5) POPS SUBSCRIBERS SUBSCRIBERS
- ----------------- ----------------- ----------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lincoln MSA April 23, 1987 100.0 220,126 220,126 12,845 12,845
Omaha MSA December 31, 1991 27.6(3) 614,731(6) 169,666 21,635 5,971
Nebraska RSAs November 25, 1989 13.1 825,169 108,097 (7 ) (7 )
Iowa RSA 1 June 30, 1989 11.0(4) 61,965 6,816 (7 ) (7 )
<FN>
- ------------------------
(1) Systems are as follows:
Lincoln MSA -- Lancaster County, Nebraska
Omaha MSA -- Douglas and Sarpy Counties in Nebraska and Pottawatamie
County in Iowa
Nebraska RSAs -- 89 of the 90 Nebraska counties not in the Omaha and
Lincoln MSAs
Iowa RSA 1 -- Southwestern six counties of Iowa
(2) The date the Company's operating license was granted in the case of the
Lincoln MSA, and the date of the Company's initial acquisition of an
interest in the licensee in the case of the other systems.
(3) In addition, the Company has as an option to purchase an additional 27.6%
interest in the licensee of the Omaha MSA at fair market value.
(4) Includes the Company's allocable portion of the 14.1% interest in the
licensee held by the Omaha MSA system.
(5) Based upon Donnelley Marketing Information Services population data for
1992. Pops shown for Lincoln and Omaha MSAs are virtually all covered by the
networks of these systems. According to estimates available to the Company,
approximately 90% of the pops shown for Nebraska RSAs and Iowa RSA 1 are
covered by the networks of these systems.
(6) Does not include the Omaha MSA licensee's 14.1% interest in Iowa RSA 1
(which system has been separately included in the table) or the Omaha MSA
licensee's 8.3% interest in Iowa RSA 8 (representing 54,125 pops and 4,492
net pops).
(7) The data regarding the subscribers and net subscribers is not disclosed
herein because it is not considered material to the Company's consolidated
operations.
</TABLE>
Since assuming management of the Omaha MSA operations, over $6.9 million has
been invested by the licensee to improve cellular coverage in the Omaha MSA and
to open new retail and service centers. Synergies between the Lincoln and Omaha
markets have allowed for expanded advertising and promotional programs at lower
costs. In both markets, the Company has increased system minutes of use by
selling features, such as voice mail, call waiting, and call forwarding.
OTHER SERVICES AND PRODUCTS
The Company is a "reseller" of long distance services, primarily in its
exchange service area, and provides this service by aggregating its customers'
traffic to take advantage of volume discounts offered by national networks.
During 1992, the Company had 105.8 million minutes of long distance
10
<PAGE>
traffic, an increase of 2 million minutes from 1991. For 1993, the Company had
110.0 million minutes of long distance usage, up 4.0% over 1992. According to
publicly available information, at December 31, 1993, the Company's rates for
long distance service were generally less than AT&T, MCI and Sprint. The Company
has a variety of calling programs for both residential and business customers.
Rates of all carriers change frequently and the foregoing rate comparisons may
change in the future.
The Company also sells and services a wide range of PBX, key system and
other communications equipment to large and small businesses, including products
manufactured by ROLM and Northern Telecom. These systems typically include a
variety of special features such as automatic call distribution, voice mail, and
LAN functionality.
The Company publishes six regional telephone directories and has been a
leader in the development of new revenue-producing directory features.
Advertisers can enhance their Yellow Page ads with "talking ads," four-color ads
and coupons.
The Company also provides billing and collection services and operator
services, both with respect to its own customers and, under contract, with
respect to the customers of AT&T and certain other carriers.
REGULATORY ENVIRONMENT
In 1986, Nebraska enacted legislation which substantially deregulated the
pricing of telecommunications services. The Company has flexibility to change
prices for its non-local exchange communications services without prior or
subsequent regulatory review. While certain local exchange rate increases are
subject to regulatory review as described below, the procedures applicable to
such increases have significantly reduced the delays in obtaining rate approval
which had been customary with traditional rate applications. The Company has the
ability to price and offer new services to its customers with minimal regulatory
oversight.
Since 1986, telecommunications companies in Nebraska have been permitted to
increase local exchange rates up to 10% in any consecutive 12-month period
without review by the NPSC. However, the Company must provide at least 60 days
notice to affected customers and conduct public informational meetings. If at
least 3% of all affected subscribers sign a formal complaint opposing the
increase within 120 days from such notice, the NPSC must hold and complete a
hearing with regard to the complaint within 90 days to determine whether the
proposed rates are fair, just and reasonable. Within 60 days after the close of
such hearing, the NPSC must enter an order adjusting the rates at issue.
Rates for all other services are not subject to regulation by the NPSC.
Rates for other services may be revised by a telecommunications company by
filing a rate list with the NPSC which is effective after ten days' notice to
the NPSC. Quality of service regulation over interexchange and local exchange is
retained by the NPSC. Nebraska has completely deregulated the provision of
mobile radio services and radio paging services.
Regardless of whether a particular rate increase is subject to regulatory
review, the Company's ability to raise rates will be determined by various
factors, including economic and competitive circumstances in effect at the time.
From time to time, including in January 1994, proposals have been made by
the Nebraska legislature and the NPSC to re-regulate rates for
telecommunications services, including local and interexchange long distance
rates, offered in Nebraska. In addition, a bill was introduced in the Nebraska
legislature in January 1994, which if passed in its current form, would
eliminate the Company's exclusive ability to provide basic local exchange
service in its certificated service area (the southeastern 22 counties of
Nebraska) and potentially subject the Company to competition from other
providers of basic local exchange service, interexchange service and extended
area service. Consideration of these two proposals was indefinitely postponed by
the Transportation Committee of the Nebraska legislature, the committee to which
they were assigned, and will not advance to the full
11
<PAGE>
Nebraska legislature during the current term without a supermajority vote of
legislators. The Company cannot provide any assurance that similar proposals
will not be introduced in the future or that the current regulatory environment
in Nebraska will continue without change or make any predictions as to what
impact any change may have on the Company's operations.
The FCC regulates interstate telephone services provided by the Company.
This regulation primarily consists of the regulation of interstate access
charges that are billed to interexchange carriers for the origination and
termination of interstate long distance services by end-user customers over the
Company's local exchange network. The Company elected to be subject to price cap
regulation by the FCC effective July 2, 1993, pursuant to which limits are
imposed on the Company's interstate service rates. Prior to July 2, 1993, the
Company operated under rate-of-return regulation, which offered less pricing and
earnings flexibility than under price cap regulation. From time to time, the FCC
modifies existing regulations and adopts new regulations concerning interstate
telephone services, and there can be no assurance as to what impact such
regulations may have.
The licensing, ownership, construction, operation and sale of controlling
interests in cellular telephone systems are subject to regulation by the FCC.
The FCC licenses for the Company's Lincoln MSA and Omaha MSA cellular operations
expire between October 1994 and October 1996, while FCC licenses for the
Company's Iowa RSA and Nebraska RSA cellular operations expire between July 1999
and August 2000. All renewal applications for these licenses must be received by
the FCC not later than 30 and not more than 60 days in advance of their
respective expiration dates and must be approved by the FCC. It is possible that
there may be competition for these FCC licenses upon expiration, and any such
competitors may apply for such licenses within the same time frame as the
Company. However, incumbent cellular providers generally retain their FCC
licenses upon a demonstration of substantial compliance with FCC regulations and
substantial service to the public. The FCC will only consider competitors'
applications if it determines the Company has not made such a demonstration.
Although the Company has no reason to believe that the FCC renewal applications
will not be granted by the FCC, no assurance can be given.
For a five-year period ending after the date of the grant of a cellular
license by the FCC (the "fill-in period"), the licensee has the exclusive right
to apply to serve areas within the RSA or the MSA. At the end of the fill-in
period, any person may apply to serve the unserved areas in the MSA or RSA. The
fill-in period for both the Lincoln and Omaha MSAs has expired and no person has
filed to serve any unserved areas in those locations. The fill-in periods for
the Nebraska RSAs and the Iowa RSA expire between November 1994 and May 1995.
MANAGEMENT
The following table sets forth certain information about the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------- --- --------------------------------------------------------------
<S> <C> <C>
Frank H. Hilsabeck 49 President and Chief Executive Officer
Thomas C. Woods, III 48 Chairman of the Board
James W. Strand 47 President-Diversified Operations
Jack H. Geist 61 Vice President-Diversified Operations
Robert L. Tyler 58 Senior Vice President and Chief Financial Officer
Michael J. Tavlin 47 Vice President-Treasurer and Secretary
</TABLE>
Frank H. Hilsabeck has been Chief Executive Officer since May 1993. Prior to
that, he was President and Chief Operating Officer from March 1992 to May 1993
and before that was President-Telephone Operations from 1990 to March 1992 and
Vice President-Telephone Operations from 1986-1990.
12
<PAGE>
Thomas C. Woods, III has been Chairman of the Board since May 1993. Prior to
that, he was Vice Chairman of the Board-Corporate Relations and Communications
from 1990 to May 1993 and before that was Vice President-Corporate Relations
from 1985-1990.
James W. Strand has been President-Diversified Operations since 1990 and
before that was Vice President-Diversified Operations from 1987-1990.
Jack H. Geist has been Vice President-Diversified Operations since 1991.
Prior to that, he was President of the Anixter-Lincoln Partnership Joint Venture
from 1989-1991 and was President of a now-dissolved subsidiary of the Company
from 1986-1989.
Robert L. Tyler has been Senior Vice President and Chief Financial Officer
since 1991. Prior to that, he was Vice President-Controller from 1989-1991 and
before that was Accounting Director of LT&T from 1979-1989.
Michael J. Tavlin has been Vice President-Treasurer since 1986 and Secretary
since 1987.
SELLING STOCKHOLDER
All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholder. At the date of this Prospectus, the Selling Stockholder
beneficially owned 5,412,976 shares of Common Stock representing approximately
16.6% of the outstanding Common Stock as of December 31, 1993. Immediately after
the sale of the shares of Common Stock offered hereby and the sale of shares to
the Employee Trust (but without giving effect to exercise of the Underwriters'
over-allotment option), the Selling Stockholder will beneficially own 3,032,976
shares of Common Stock, representing approximately 9.3% of the outstanding
shares of Common Stock.
Charles N. Wheatley, the President, Chief Executive Officer and a director
of the Selling Stockholder, and George Kelm, the Chairman and a director of the
Selling Stockholder, are directors of the Company. Thomas C. Woods, III, the
Chairman of the Board of the Company, is a director of the Selling Stockholder.
The Selling Stockholder is a holding company with a portfolio of investments
which is controlled by descendants of the Company's founder, including Thomas C.
Woods, III.
SALE OF SHARES TO COMPANY
Concurrently with the sale of the shares offered hereby, the Selling
Stockholder will sell 250,000 shares of Common Stock to the Company at a price
equal to the public offering price less a discount of 2% of such price. Such
Common Stock will be held as treasury stock and will be reissued in the future
to fund the Company's stock obligations under one or more Company employee
benefit plans. The Company anticipates financing the acquisition of such shares
through incurrence of short-term indebtedness of approximately $4,533,000.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $.25 par value, and 20,000,000 shares of Preferred Stock, $.50
par value. As of December 31, 1993, there were 32,595,350 shares of Common Stock
outstanding. There are no shares of Preferred Stock outstanding, although LT&T
has publicly-held 5% redeemable preferred stock outstanding.
COMMON STOCK
After all cumulative dividends have been paid or declared and set apart for
payment on any shares of Preferred Stock that are outstanding, the Common Stock
is entitled to such dividends as may be declared from time to time by the Board
of Directors in accordance with applicable law. For certain restrictions on the
ability of the Company to declare dividends, see "Price Range of Common Stock
and Dividends."
Except as provided under Nebraska law and except as may be determined by the
Board of Directors of the Company with respect to any series of Preferred Stock,
only the holders of Common
13
<PAGE>
Stock shall be entitled to vote for the election of directors of the Company and
on all other matters. Subject to the limitations imposed by Nebraska law as
described below, upon any such vote the holders of Common Stock shall be
entitled to one vote for each share of Common Stock held by them. Under Nebraska
law, holders of Common Stock are entitled to cumulative voting rights in the
election of directors. Cumulative voting allows a stockholder to vote the number
of shares owned by such stockholder for as many persons as there are directors
to be elected, or to cumulate such votes and give one person as many votes as
the number of directors to be elected multiplied by the number of such
stockholder's shares, or to distribute such votes among as many directors to be
elected as such stockholder sees fit.
All shares of Common Stock are entitled to participate equally in
distributions in liquidation, subject to the prior rights of any Preferred Stock
which may be outstanding. Except as the Board of Directors may in its discretion
otherwise determine, holders of Common Stock have no preemptive rights to
subscribe for or purchase shares of the Company. There are no conversion rights,
or sinking fund or redemption provisions applicable to the Common Stock. The
shares of Common Stock offered hereby are fully paid and nonassessable.
Mellon Securities Trust Company, New York, New York, is the transfer agent
and registrar for the Common Stock.
PREFERRED STOCK
The Board of Directors is authorized to issue from time to time, without
stockholder authorization, in one or more designated series, shares of Preferred
Stock with such preferences, voting rights, conversion rights, limitations and
relative rights as are provided in the particular series which could adversely
affect the voting rights of holders of Common Stock. No dividends or other
distributions are payable on the Common Stock unless dividends are paid in full
on the outstanding shares of Preferred Stock. In the event of a liquidation or
dissolution of the Company, the outstanding shares of Preferred Stock would have
priority over the Common Stock to receive the amounts specified in each
particular series out of the remaining assets of the Company.
CERTAIN STATUTORY AND OTHER PROVISIONS
STATUTORY PROVISIONS. The Nebraska Statutes provide that the voting power
of shares of a Nebraska corporation such as the Company held by any person or
persons acting as a group of 20% or more is eliminated with respect to all
matters other than the election of directors, unless otherwise approved by a
vote of the disinterested stockholders at a special or annual meeting pursuant
to certain provisions of the Nebraska Statutes. To the extent so approved, such
shares shall have the same voting rights as other shares of the same class or
series. This restriction does not apply to shares acquired directly from the
Company or in certain specified transactions.
The Nebraska Statutes provide that a Nebraska corporation such as the
Company may not engage in a business combination with a beneficial owner of 10%
or more of the voting shares of the corporation (or an affiliate of such a
beneficial owner) unless, before such shares were acquired, the board of
directors of the corporation approved the business combination or the
stockholder's acquisition of those shares which causes such stockholder's
beneficial ownership to equal or exceed 10% of the voting shares.
ARTICLES OF INCORPORATION. The Articles of Incorporation provide that the
Board of Directors of the Company is divided into three classes, with staggered
terms of three years each. Each year the term of one class expires. The members
constituting the entire Board of Directors may be removed from office only by
the affirmative vote of at least 70% of all outstanding shares of Common Stock.
The Articles of Incorporation provide that the approval of a merger,
consolidation, exchange of all outstanding shares, or sale, lease or other
disposition of all or substantially all of the Company's assets requires the
affirmative vote of at least 70% of all outstanding shares of Common Stock.
14
<PAGE>
The Articles of Incorporation provide that the amendment or repeal of any of
the provisions described in the preceding paragraph requires the affirmative
vote of at least 70% of all outstanding shares of Common Stock.
The statutory provisions and the provisions of the Company's Articles of
Incorporation described above and the Common Stock Purchase Rights described
below could have the effect of delaying, deterring or preventing a change in
control of the Company or a merger, reorganization, tender offer or sale of all
or substantially all of the Company's assets.
COMMON STOCK PURCHASE RIGHTS
Under the Rights Agreement, dated as of June 21, 1989, as amended (the
"Rights Agreement"), each outstanding share of Common Stock (including the
shares being sold by the Selling Stockholder in this offering) has attached
thereto one Common Stock Purchase Right (a "Right") and each share subsequently
issued by the Company prior to the expiration of the Rights Agreement will also
have attached thereto one Right. Under certain circumstances described below,
the Rights will entitle the holder thereof to purchase additional shares of
Common Stock. In this Prospectus, unless the context otherwise requires, all
references to the Common Stock include the accompanying Rights.
Currently, the Rights are not exercisable and trade with the Common Stock.
In the event the Rights become exercisable, each Right (unless held by a person
or group, other than the Selling Stockholder, which beneficially owns more than
10% of the outstanding Common Stock) will initially entitle the holder to
purchase for $21.875 an amount of the Common Stock having a market value of
$43.75. The Rights will only become exercisable if a person or group, other than
the Selling Stockholder, has acquired, or announced an intention to acquire, 10%
or more of the outstanding shares of Common Stock. In the event of the
acquisition of the Company by another corporation subsequent to a party
acquiring 10% or more of the Common Stock, each holder of a Right will be
entitled to receive the acquiring corporation's common shares having a market
value of two times the exercise price per Right. The Rights may be redeemed at a
price of $.0025 per Right prior to the existence of a 10% acquiring party, and
thereafter may be exchanged for one share of Common Stock per Right prior to the
existence of a 50% acquiring party. The Rights will expire on June 30, 1999. The
Rights do not have voting or dividend rights and, until they become exercisable,
have no dilutive effect on the earnings of the Company.
15
<PAGE>
UNDERWRITING
The Underwriters (the "Underwriters") named below, acting through their
representatives, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Dain
Bosworth Incorporated (the "Representatives"), have severally agreed, subject to
the terms and conditions of a Purchase Agreement with the Company and the
Selling Stockholder (the "Purchase Agreement"), to purchase from the Selling
Stockholder the number of shares of Common Stock set forth below opposite their
respective names. The Underwriters are committed to purchase all of the shares
of Common Stock if any are purchased. Under certain circumstances, the
commitments of non-defaulting Underwriters may be increased as set forth in the
Purchase Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------------- -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................................
Dain Bosworth Incorporated.............................................................
-------------
Total....................................................................... 2,130,000
-------------
-------------
</TABLE>
The Representatives have advised the Company and the Selling Stockholder
that they propose initially to offer the shares of Common Stock to the public at
the public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a discount not
in excess of $ per share on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Selling Stockholder has granted the Underwriters an option, exercisable
within 30 days after the date of this Prospectus, to purchase up to 319,500
additional shares of Common Stock to cover over-allotments, if any, at the
initial public offering price, less the underwriting discount. If the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage of such additional shares which the number of shares set forth next
to such Underwriter's name in the preceding table bears to the 2,130,000 shares
of Common Stock initially offered hereby.
Without the Representatives' prior written consent, the Selling Stockholder
has agreed not to sell or otherwise dispose of any shares of Common Stock for a
period of 180 days after the date of this Prospectus. Without the
Representatives' prior written consent, the Company has agreed not to sell or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus, other than the shares of Common Stock to be issued
upon the exercise of the Rights or pursuant to the Company's current employee
benefit plans.
The Company and the Selling Stockholder have severally agreed to indemnify
the Underwriters against certain liabilities which may be incurred in connection
with the offering of the Common Stock, including liabilities under the
Securities Act or to contribute to payments that the Underwriters may be
required to make in respect thereof.
16
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed on for the
Company by Foley & Lardner, Milwaukee, Wisconsin. Certain legal matters will be
passed on for the Underwriters by Skadden, Arps, Slate, Meagher & Flom, Chicago,
Illinois. Foley & Lardner and Skadden, Arps, Slate, Meagher & Flom will rely on
Woods & Aitken, Lincoln, Nebraska, with respect to matters of Nebraska corporate
law. J. Taylor Greer, a member of Woods & Aitken, is a director of the Company.
Gilbert G. Lundstrom, a member of Woods & Aitken until January 1, 1994 when he
left Woods & Aitken to become president of a financial institution, is a
director of the Selling Stockholder. John H. Ziegenbein, who is of counsel to
Woods & Aitken, is the spouse of a director of the Company. Attorneys of Woods &
Aitken participating in matters relating to the offering beneficially own 33,452
shares of Common Stock (excluding shares beneficially owned by the Selling
Stockholder and that may be deemed to be owned by Mr. Lundstrom because he is a
director of the Selling Stockholder).
EXPERTS
The consolidated financial statements and schedules included in the
Company's 1992 Form 10-K and in its Form 8-K dated February 14, 1994,
incorporated by reference in this Prospectus and in the Registration Statement,
have been included herein in reliance on the reports dated February 5, 1993 and
February 4, 1994, as amended by the Form 8-K/A dated March 4, 1994, of KPMG Peat
Marwick, independent auditors, appearing in the 1992 Form 10-K and the Form 8-K
dated February 14, 1994, respectively, given on the authority of said firm as
experts in auditing and accounting.
17
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained or incorporated by
reference in this Prospectus in connection with the offering covered by this
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company, the Selling Stockholder or
the Underwriters. This Prospectus does not constitute an offer to sell, or
solicitation of an offer to buy, the Common Stock in any jurisdiction where, or
to any person to whom, it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has not been any change in
the facts set forth in this Prospectus or in the affairs of the Company since
the date hereof.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Price Range of Common Stock and Dividends...... 5
Use of Proceeds................................ 5
Capitalization................................. 6
Recent Operating Results....................... 6
Selected Consolidated Financial Data........... 7
Business....................................... 8
Management..................................... 12
Selling Stockholder............................ 13
Sale of Shares to Company...................... 13
Description of Capital Stock................... 13
Underwriting................................... 16
Legal Matters.................................. 17
Experts........................................ 17
</TABLE>
2,130,000 SHARES
LINCOLN
TELECOMMUNICATIONS
COMPANY
COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
DAIN BOSWORTH
INCORPORATED
, 1994
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Selling Stockholder and the Company have agreed that the Selling
Stockholder will bear the first $200,000 of out-of-pocket expenses incurred by
the Company in connection with the distribution of the securities registered
hereby and the Company will bear the remainder of such expenses. In addition,
the Selling Stockholder will bear all expenses incurred by it in connection with
such distribution.
The following table sets forth the estimated expenses of the Company and the
Selling Stockholder in connection with the distribution of the securities being
registered hereby. Of such expenses, $245,000 will be borne by the Selling
Stockholder and the remainder will be borne by the Company.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee...................... $ 15,415
Printing expenses........................................................ 55,000
Accounting fees and expenses............................................. 15,000
Legal fees and expenses.................................................. 175,000
Blue Sky fees and expenses............................................... 10,000
Miscellaneous expenses................................................... 5,269
---------
Total.................................................................. $ 275,684
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the provisions of Section 21-2004(15) of the Nebraska Business
Corporation Act, the Company has the power to indemnify certain persons,
including its officers and directors under stated circumstances and subject to
certain limitations, for liabilities incurred in connection with services
performed in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Company. By resolution of Company's Board
of Directors pursuant to Article 55 of the By-laws of the Company by contractual
agreement and pursuant to certain provisions of an insurance policy, the Company
has provided for indemnification of officers and directors of the Company, and
certain other persons, against liabilities and expenses incurred by any of them
in certain stated proceedings and under certain stated conditions.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in said Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer, or controlling person of the Company in the
successful defense of any such action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by any final adjudication of
such issue.
ITEM 16. EXHIBITS.
The exhibits filed herewith are as specified on the Exhibit Index included
herein.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference
II-1
<PAGE>
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offer of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lincoln, and State of Nebraska, on this 7th day of
March, 1994.
LINCOLN TELECOMMUNICATIONS COMPANY
By: /s/ FRANK H. HILSABECK
-----------------------------------
Frank H. Hilsabeck
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on March 7, 1994 by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ FRANK H. HILSABECK
------------------------------------------- President and Chief Executive Officer
Frank H. Hilsabeck and Director (Principal Executive Officer)
/s/ ROBERT L. TYLER Senior Vice President and Chief Financial
------------------------------------------- Officer (Principal Financial and
Robert L. Tyler Accounting Officer)
DUANE W. ACKLIE* Director
-------------------------------------------
WILLIAM W. COOK, JR.* Director
-------------------------------------------
TERRY L. FAIRFIELD* Director
-------------------------------------------
JAMES E. GEIST* Director
-------------------------------------------
J. TAYLOR GREER* Director
-------------------------------------------
JOHN HAESSLER* Director
-------------------------------------------
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
CHARLES R. HERMES* Director
-------------------------------------------
GEORGE KELM* Director
-------------------------------------------
DONALD H. PEGLER, JR.* Director
-------------------------------------------
PAUL C. SCHORR, III* Director
-------------------------------------------
WILLIAM C. SMITH* Director
-------------------------------------------
JAMES W. STRAND* Director
-------------------------------------------
CHARLES N. WHEATLEY* Director
-------------------------------------------
THOMAS C. WOODS, III* Director
-------------------------------------------
LYN WALLIN ZIEGENBEIN* Director
-------------------------------------------
*By: /s/ FRANK H. HILSABECK
--------------------------------------
FRANK H. HILSABECK
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DOCUMENT DESCRIPTION PAGE NUMBER
- ---------- -------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
(1) Form of Purchase Agreement.................................................................. *
(4.1) Articles of Incorporation (incorporated by reference to Exhibit 3 to the Registrant's Form
S-3 Registration Statement No. 33-21557)................................................... *
(4.2) By-Laws of the Registrant................................................................... *
(4.3) Rights Agreement, dated as of June 21, 1989, between the Registrant and Harris Trust and
Savings Bank (incorporated by reference to Exhibit 4.1 to Registrant's Current Report on
Form 8-K dated June 21, 1989).............................................................. *
(4.4) Amendment to Rights Agreement, dated as of September 7, 1989 between the Registrant and
Harris Trust and Savings Bank (incorporated by reference to Exhibit 4.2 to Registrant's
Current Report on Form 8-K dated September 7, 1989)........................................ *
(4.5) Amendment No. 2 to Rights Agreement dated June 15, 1993 between the Registrant and Harris
Trust and Savings Bank and Mellon Securities Trust Company................................. *
(5.1) Opinion of Foley & Lardner..................................................................
(24.1) Consent of Foley & Lardner (included in Exhibit (5.1))......................................
(24.2) Consent of KPMG Peat Marwick................................................................
(25) Powers of Attorney.......................................................................... *
<FN>
- ------------------------
* Previously filed with the Registration Statement or incorporated by reference
herein.
</TABLE>
<PAGE>
EXHIBIT 5.1
FOLEY & LARDNER
Firstar Center
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
March 7, 1994
Lincoln Telecommunications Company
1440 M Street
Lincoln, Nebraska 68508
Gentlemen:
We have acted as counsel for Lincoln Telecommunications Company, a Nebraska
corporation (the "Company"), with respect to the preparation of a Registration
Statement on Form S-3 and Amendments No. 1 and 2 thereto (the "Registration
Statement"), including the prospectus constituting a part thereof (the
"Prospectus"), to be filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the proposed sale by Sahara Enterprises, Inc. (the "Selling
Stockholder") of up to 2,130,000 shares (plus up to 319,500 additional shares to
cover over-allotments, if any) of Common Stock, $0.25 par value, of the Company
(the "Common Stock") and the associated rights to purchase shares of Common
Stock accompanying each share of Common Stock (the "Rights"), in the manner set
forth in the Registration Statement and Prospectus. The terms of the Rights are
as set forth in that certain Rights Agreement, dated as of June 21, 1989, by and
between the Company and Mellon Securities Trust Company, as rights agent, as
amended by amendments No. 1 and No. 2, dated September 7, 1989 and June 15,
1993, respectively (the "Rights Agreement").
In connection with our representation, we have examined: (a) the
Registration Statement, including the Prospectus; (b) the Articles of
Incorporation and By-laws of the Company, as amended to date; (c) the Rights
Agreement; and (d) such other proceedings, documents and records as we have
deemed necessary to enable us to render this opinion. To the extent that our
opinion pertains to matters of Nebraska law, we have relied solely on the
opinion, dated as of March 7, 1994, of Woods & Aitken, a copy of which is
attached hereto. To the extent that our opinion below relies on the opinion of
Woods & Aitken, our opinion is given solely to the extent set forth in the
opinion of Woods & Aitken and is subject to any assumptions, limitations and
qualifications contained therein, all of which are hereby incorporated by
reference.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing under the laws of the
State of Nebraska.
2. The shares of Common Stock offered by the Selling Stockholder as
contemplated in the Registration Statement are validly issued, fully paid and
nonassessable.
3. The Rights are validly issued.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the references to our firm therein. In giving our consent, we
do not admit that we are "experts" within the meaning of Section 11 of the
Securities Act or within the category of persons whose consent is required by
Section 7 of the Securities Act.
Very truly yours,
FOLEY & LARDNER
<PAGE>
WOODS & AITKEN
1500 American Charter Center
206 South 13th Street
Lincoln, Nebraska 68508
March 7, 1994
Lincoln Telecommunications Company
1440 M Street
Lincoln, Nebraska 68508
Gentlemen:
We have acted as Nebraska corporate counsel for Lincoln Telecommunications
Company, a Nebraska corporation (the "Company"), assisting Foley & Lardner with
respect to Nebraska corporate law matters in the preparation of a Registration
Statement on Form S-3, and Amendments No. 1 and 2 thereto (the "Registration
Statement"), including the prospectus constituting a part thereof (the
"Prospectus"), to be filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the proposed sale of Sahara Enterprises, Inc. (the "Selling
Stockholder") of up to 2,130,000 shares (plus up to 319,500 additional shares to
cover over-allotments, if any) of Common Stock, $0.25 par value, of the Company
(the "Common Stock"), and the associated rights to purchase shares of Common
Stock accompanying each share of Common Stock (the "Rights"), in the manner set
forth in the Registration Statement and Prospectus. The terms of the Rights are
set forth in that certain Rights Agreement, dated as of June 21, 1989, by and
between the Company and Mellon Securities Trust Company, as rights agent, as
amended by amendments No. 1 and No. 2, dated September 7, 1989 and June 15,
1993, respectively (the "Rights Agreement").
In connection with our representation, we have examined: (a) the
Registration Statement, including the Prospectus; (b) the Articles of
Incorporation and By-Laws of the Company, as amended to date; (c) the Rights
Agreement; and (d) such other proceedings, documents and records as we have
deemed necessary to enable us to render this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation existing in good standing under the
Nebraska Business Corporation Act.
2. The shares of Common Stock offered by the Selling Stockholder, as
contemplated in the Registration Statement, are validly issued, fully paid and
nonassessable under the Nebraska Business Corporation Act.
3. The Rights are validly issued under the Nebraska Business Corporation
Act.
We consent to the use of this opinion by Foley & Lardner and to the
reference to and reliance upon this opinion in the opinion issued by Foley &
Lardner with regard to this transaction.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the references to our firm therein. In giving our consent, we
do not admit that we are "experts" within the meaning of Section 11 of the
Securities Act or within the category of persons whose consent is required by
Section 7 of the Securities Act.
Very truly yours,
WOODS & AITKEN
<PAGE>
EXHIBIT 24.2
ACCOUNTANTS' CONSENT
The Board of Directors
Lincoln Telecommunications Company:
We consent to the incorporation by reference in the registration statement
on Form S-3 of Lincoln Telecommunications Company of (i) our report, dated
February 5, 1993, relating to the consolidated balance sheets of Lincoln
Telecommunications Company and subsidiaries as of December 31, 1992 and 1991,
and related consolidated statements of earnings, common stock investment and
preferred stock and cash flows and relating to the schedules to Form 10-K for
each of the years in the three-year period ended December 31, 1992, which report
appears in the December 31, 1992 annual report on Form 10-K of Lincoln
Telecommunications Company; and (ii) our report dated February 4, 1994, relating
to the consolidated balance sheets of Lincoln Telecommunications Company and
subsidiaries as of December 31, 1993 and 1992, and related consolidated
statements of earnings, common stock investment and preferred stock and cash
flows for each of the years in the three-year period ended December 31, 1993,
which report appears in the Current Report on Form 8-K of Lincoln
Telecommunications Company, filed with the Securities and Exchange Commission on
February 15, 1994 and Amendment No. 1 thereto on Form 8-K/A dated March 4, 1994.
We also consent to the reference to our Firm under the heading "Experts" in
the registration statement.
KPMG PEAT MARWICK
March 4, 1994
Lincoln, Nebraska
