FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] Annual Report Pursuant to section 13 or 15(d) of the
securities exchange act of 1934
For the fiscal year ended December 31, 1994
OR
[ ] Transition report prusuant to section 13 or 15(d) of
the securities exchange act of 1934
Commission file number 0-1244
UNITED TELEPHONE COMPANY OF FLORIDA
(Exact name of registrant as specified in its charter)
FLORIDA 59-0248365
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 165000, Altamonte Springs, Florida 32716-5000
(Address of principal executive offices)
(407) 889-6010
(Registrant's telephone number, including area code)
Securities registered pursuant to Sections 12(b) and 12(g)
of the Act:
None
Securities subject to Section 15(d) of the Act:
Title of each class
-------------------
First Mortgage Bonds
6 1/4% due May 15, 2003 9 1/4% due September 15, 2019
7 1/4% due December 1, 2004 7 1/8% due July 15, 2023
6 7/8% due July 15, 2013 8 3/8% due January 15, 2025
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The redeemable, voting preferred stock outstanding as of the date of filing
of this report is not actively traded; therefore, no market value is
available. There is no common stock held by non-affiliates.
There are 6,500,000 shares of common stock outstanding at the end of the
fiscal year and as of the date of filing of this report.
Item 1. Business
--------
United Telephone Company of Florida (the Company) is a subsidiary of Sprint
Corporation (Sprint). The principal executive offices of the Company are
located at 555 Lake Border Drive, Apopka, Florida 32703.
The Company was formed as the result of a combination effective December
31, 1982, pursuant to an Agreement and Plan of Merger, in which the
Company's affiliates, the former United Telephone Company of Florida, The
Winter Park Telephone Company and Orange City Telephone Company,
Incorporated were merged into Florida Telephone Corporation (FTC). As the
surviving corporation, FTC, which had been incorporated under the laws of
the State of Florida on September 29, 1925, amended its articles of
incorporation to provide for a change of corporate name to United Telephone
Company of Florida.
The Company is engaged in the business of furnishing communication
services, principally local, network access and long distance services,
serving approximately 1,134,000 customers in all or part of 24 Florida
counties, comprising some 30 percent of the state's total area. The
Company's current estimate of population within its service areas is 2.4
million as compared to census counts of approximately 1.8 million in 1990,
1.0 million in 1980 and 600,000 in 1970.
The Company had 6,005 employees at December 31, 1994, of which 2,727 or
45.4 percent are represented by either the Communications Workers of
America or the International Brotherhood of Electrical Workers for
collective bargaining purposes. Of the 6,005 employees, 1,418 are
dedicated to serving Central Telephone Company of Florida, an affiliated
company which reimburses the Company for the related employee costs.
In addition to furnishing local service, the Company's central offices and
toll lines are connected with other telephone companies and with the
nationwide toll networks of interexchange carriers (IXCs) for the provision
of message toll service and other long distance services. Toll calls may
thus be made to any telephone in the United States and most other
countries. Other telecommunications services, for the most part furnished
in conjunction with other telephone companies, include facilities for
private line service, data transmission and wide area toll service (WATS).
Revenues from communication services constituted 86.1 percent of the
operating revenues of the Company in 1994. The remaining 13.9 percent was
derived largely from directory operations, equipment sales, facilities
leases and billing and collection services provided to IXCs. A significant
portion of the Company's network access revenue is derived from network
access billings to AT&T Corp. (AT&T). However, the Company does not
believe its revenues are dependent upon AT&T, as customers' demand for
interLATA long distance telephone service is not tied to any one long
distance carrier. As the market share of AT&T's long distance competitors
increases, the percent of revenues derived from network access services
provided to AT&T decreases.
During the five years ended December 31, 1994, the compounded annual growth
rate in access lines served was 5.1 percent.
I-1
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART I
Item 1. Business (continued)
<TABLE>
The following table summarizes access lines in service at the end of each
of the last five years together with the number of access minutes of use
for each of those years:
<CAPTION> (Expressed in thousands, except percentages)
Access Lines Served
------------------ Percent Access Minutes Percent
Year Residence Business Total Increase of Use Increase
------ --------- -------- ----- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
1994 964 326 1,290 5.5 5,425,072 10.7
1993 920 303 1,223 5.3 4,898,573 5.6
1992 882 279 1,161 4.4 4,639,061 6.4
1991 849 263 1,112 4.3 4,360,713 6.6
1990 819 247 1,066 6.0 4,089,885 12.3
In 1987 the Company formed United Telephone Long Distance, Inc. (UTLD), a
Florida corporation, and in 1988 the Florida Public Service Commission
(FPSC) granted UTLD's request for certification as an interexchange
carrier. UTLD resells WATS service as interLATA message telephone service
from exchanges within the Company's service area.
Effective January 1, 1991, the Federal Communications Commission (FCC)
adopted a price cap regulatory format for the Bell Operating Companies and
the GTE local exchange companies. Other local exchange companies (LECs)
could volunteer to become subject to the price cap regulation. Under price
caps, prices for access service must be adjusted annually to reflect
industry average productivity gains (as specified by the FCC), inflation
and certain allowed cost changes. The Company elected to be subject to
price cap regulation, and under the form of the plan adopted, the Company
has an opportunity to earn up to a 15.25 percent rate of return on
investment on its interstate operations. The FCC is conducting a scheduled
review of all aspects of the price cap plan and is expected to implement
changes in 1995. Without further action by the FCC, the current price cap
plan will expire in 1995 and will be replaced by rate of return regulation.
It is expected that the FCC will act and that there will not be a return to
rate of return regulation.
In June 1994, the Company entered into a stipulation with the FPSC whereby
the Company's intrastate rates were reduced by $17.6 million on an annual
basis beginning July 1, 1994. Approximately $9.9 million of the rate
reduction was in intrastate access elements and was intended to bring the
intrastate access rates more in line with interstate rates. Approximately
$5.0 million of the rate reduction was in intraLATA toll rates, and $2.7
million in local service revenue. In addition, the Company agreed to
record additional depreciation of $2.8 million ($2.1 million intrastate),
which was recognized in the second quarter. The Company's allowed
intrastate return on equity was capped at 13.0 percent for 1994 with any
earnings in excess of 13.0 percent to be deferred to 1995 when, absent
further commission action, the upper range of the allowed return reverts to
13.5 percent.
I-2
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART I
Item 1. Business (continued)
--------------------
In November 1994, in compliance with FPSC regulations, the Company filed
its triennial depreciation study seeking an increase in annual depreciation
expense of approximately $16.3 million effective January 1, 1995. In this
filing the Company sought shorter service lives to recognize obsolescence
caused by emerging technologies required to meet customer demands for more
sophisticated voice and data facilities. On January 17, 1995, the FPSC
allowed the Company to implement, on a preliminary basis, the proposed
rates, reduced by a one-time depreciation charge of $3.2 million ($2.4
million intrastate) to be recorded in 1994, which served to bring the
Company's 1994 intrastate return on equity below the 13.0 percent cap noted
above. On March 1, 1995, the Office of Public Counsel filed a petition for
a hearing in protest of the FPSC's approval of the early implementation of
the depreciation rates. A final ruling on depreciation rates is not
expected until late 1995 or early 1996.
On December 1, 1994, the FPSC approved the Company's proposal, filed
November 2, 1994, for additional rate reductions with an effective date of
January 1, 1995. The total proposed revenue reduction is projected to be
$10.6 million in 1995, $9 million of which is in switched access charge
reductions and the remainder in cellular interconnection usage rates and
intraLATA toll rates.
The potential for more direct competition with the Company is increasing.
Many states, including Florida, allow competitive entry into the intraLATA
long-distance service market. State regulators are also increasingly
confronted with requests to permit resale of local exchange services, with
such resale now existing in a number of states in which other Sprint LECs
offer local communications services, including Pennsylvania, Kansas,
Illinois and Missouri.
At the interstate level, the FCC has revised its rules to permit connection
of customer-owned coin telephones to the local network, exposing LECs to
direct coin telephone competition. Additionally, the FCC has assisted
Competitive Access Providers (CAPs) in providing access to interexchange
carriers and end users by mandating that all Tier 1 LECs, including the
Company, allow virtual colocation of CAP equipment in LEC central offices.
The extent and ultimate impact of competition for LECs will continue to
depend, to a considerable degree, on FCC and state regulatory actions,
court decisions and possible federal and state legislation. The Clinton
Administration has indicated that it supports legislation which promotes
local telephone competition. Although federal legislation designed to
stimulate local competition between local exchange service providers and
cable programming service providers in both markets has been introduced
several times in recent years, bills have yet to be reported out of both
the House of Representatives and the Senate in a session. Legislation has
been introduced in Congress in 1995. While both major political parties
are predicting that legislation will be passed, such predictions have been
proven to be inaccurate in the recent past.
I-3
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART I
Item 1. Business (continued)
--------------------
The Company's environmental compliance and remediation expenditures are
primarily related to the operation of standby power generators for its
telecommunications equipment. The expenditures arise in connection with
permits, standards compliance or occasional remediation, which may be
associated with generators, batteries or fuel storage. The Company has
been designated a potentially responsible party at a site relating to
landfill contamination. The Company's expenditures relating to
environmental compliance and remediation have not been material to the
financial statements or to the operations of the Company and are not
expected to have any future material effects.
Item 2. Properties
----------
The properties of the Company consist principally of land, structures,
facilities and equipment. Substantially all of the telephone property,
plant and equipment is subject to the liens of the indentures securing the
Company's first mortgage debt. Of the Company's investment in telephone
plant in service as of December 31, 1994, cable and wire facilities
represented approximately 50 percent of the total; central office
equipment, 37 percent; land and buildings, 6 percent; telephone instruments
and certain related equipment installed on subscriber premises, 2 percent;
and, other telephone plant, 5 percent.
</TABLE>
<TABLE>
The following table sets forth the gross property additions and the
retirements or sales of property during each of the five years in the
period ended December 31, 1994:
<CAPTION> Gross Property Retirements
Additions or Sales
-------------- -----------
(In Thousands)
<S> <C> <C>
1994 $ 177,828 $ 71,194
1993 185,002 62,599
1992 184,692 72,947
1991 175,215 124,551
1990 198,900 97,730
</TABLE>
Item 3. Legal Proceedings
-----------------
No material legal proceedings are pending to which the Company or its
subsidiary is a party or of which any of their property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matter was submitted to a vote of security holders during the fourth
quarter of 1994.
I-4
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder
Matters
All of the common stock of the Company is owned by Sprint and consequently
is not traded.
Item 6. Selected Financial Data
<TABLE>
Year Ended December 31,
---------------------------------------------------
1994 1993 1992 1991 1990
---- ----- ---- ---- ----
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating $ 865,198 $802,368 $760,905 $733,539 $716,249
Revenues
Net Income (1)(2) 110,033 77,321 97,621 92,781 102,414
Total Assets 1,665,294 1,612,083 1,540,694 1,502,006 1,508,223
Long-Term Debt
(excluding current
maturities)
and Redeemable 441,474 393,612 402,377 424,410 429,026
Preferred Stock
Stock
Access Lines
Served per
Employee (3) 281.4 261.4 243.9 237.9 225.2
(1) The years 1994, 1993, and 1992 include extraordinary losses on early
extinguishments of debt. The effects of such losses were to
decrease net income by $215,000, $1.4 million, and $1.5 million in
1994, 1993, and 1992, respectively.
(2) During 1993, nonrecurring charges of $51 million were recorded
related to Sprint's merger with Centel Corporation, which reduced
income by approximately $31 million.
(3) Effective January 1, 1994, and as a result of the Sprint/Centel
merger, employees of an affiliate, Central Telephone Company of
Florida, are, for payroll processing and benefit purposes, considered
employees of the Company. The access lines served per employee at the
end of 1994 exclude the 1,418 employees dedicated to serving Central
Telephone Company of Florida.
</TABLE>
Earnings and dividends per common share information has been omitted
because all of the common stock of the Company is owned by Sprint.
II-1
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's financial well-being plays a vital role in its efforts to
provide efficient, responsive, state-of-the-art communication services to
the rapidly growing Florida market amid the uncertainties created by
potential deregulation. In order to meet the challenges of this dynamic
environment, the Company continues to seek ways to speed capital recovery
and increase organizational efficiency through careful control of
construction expenditures, increased depreciation of telephone plant and
automation and consolidation of functions. Concurrently, efforts have been
undertaken to aggressively implement new technologies, including enhanced
digital switching, fiber optics and pair gain devices that offer expanded
services at reduced costs.
Sprint/Centel Merger
--------------------
Effective March 9, 1993, Sprint consummated its merger with Centel
Corporation, a telecommunications company with local exchange and cellular
and wireless communications services operations (see Note 9 of Notes to
Consolidated Financial Statements for additional information). The
transaction costs associated with the merger (consisting primarily of
investment banking and legal fees) and the estimated expenses of
integrating and restructuring the operations of the two companies
(consisting primarily of employee severance and relocation expenses and
costs of eliminating duplicative facilities) resulted in a nonrecurring
charge to Sprint during 1993. The portion of such charge attributable to
the Company was $51 million, which reduced 1993 net income by approximately
$31 million.
Liquidity and Capital Resources
-------------------------------
The ability to generate cash from operations is a good measure of liquidity
for the Company. The Company does not require large sums of working
capital because cash inflows are relatively stable due to the stability in
demand for telephone services.
As detailed in the Consolidated Statements of Cash Flows, the Company had
net cash provided by its operating activities of $294 million, $254 million
and $262 million in 1994, 1993 and 1992, respectively. The increase in
operating cash flows in 1994 is primarily due to an increase in operating
income adjusted for depreciation as well as an increase in accounts
payable, partially offset by an increase in accounts receivable.
The Company has large capital requirements because of its need for
substantial amounts of plant and equipment to provide communications
services to customers. The Company's planned construction expenditures for
modernization and growth in 1995 are approximately $182 million, of which
$79 million is for central office equipment, $78 million for cable and wire
facilities, $17 million for general support assets and $8 million for other
telecommunications assets. Actual expenditures were $178 million in 1994
and $185 million in both 1993 and 1992.
II-2
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liquidity and Capital Resources (continued)
-------------------------------------------
Because the Company is capital intensive, external financing is sometimes
required to supplement cash provided by operations. The primary source of
external financing has been through the issuance of debt. During the
year, the Company redeemed, prior to scheduled maturity, $2.5 million of
its Winter Park 6.50 percent Series I Bonds, and $20.5 million of its 9.25
percent Series CC Bonds. The Company issued $70 million of 8.38 percent
Series HH bonds on January 15, 1995. Long-term debt is further detailed in
Note 4 of Notes to the Consolidated Financial Statements.
The average short-term debt outstanding was $39 million during 1994, $35
million during 1993 and $20 million during 1992. Short-term debt,
consisting primarily of commercial paper and advances from Sprint,
decreased by $27 million in 1994 and increased $16 million in 1993 and $29
million in 1992. The decrease in short-term debt in 1994 resulted from a
reclassification of a portion of the balance to long-term debt due to the
issuance in January 1995 of Series HH 8.38 percent First Mortgage Bonds for
$70 million. The proceeds of this issuance were used to reduce short-term
debt (see Note 4 of Notes to the Consolidated Financial Statements).
The Company anticipates that substantially all of the cash required in 1995
for its construction program, principal payments and retirement of long
term debt, and preferred stock redemption will be provided by operating
activities. If additional funds are required during 1995, it is expected
that they will be raised through the issuance of commercial paper and bank
borrowings. The Company maintains bank lines of credit sufficient
to support outstanding commercial paper and bank borrowings and
anticipates no difficulty in meeting potential external financing
requirements in this manner during 1995. The Company had lines of credit
totaling $120 million at December 31, 1994, of which $10.2 million was
unused. As a result of the $70 million issuance of Series HH First
Mortgage Bonds and the resulting decrease in short-term debt, on February
9, 1995, the Company's lines of credit were reduced to $105 million.
At year end, the Company's ratio of common equity to total capital was 58.8
percent in 1994 and 60.8 percent in both 1993 and 1992. The ratio of
short-term debt to total capital was 3.4 percent in 1994, 5.7 percent in
1993 and 4.5 percent in 1992.
II-3
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Financial Condition
-------------------
The Company's consolidated assets totaled $1.7 billion at December 31, 1994
compared to $1.6 billion at December 31, 1993. Accounts receivable
increased $29.9 million as of December 31, 1994 generally due to an
increase in consolidated net operating revenues and the timing of sales
activities and cash collections. Property, plant and equipment, net of
accumulated depreciation, increased $9.6 million from 1993 to 1994 due to
increased capital expenditures to enhance and upgrade the Company's
network, to expand service capabilities and increase productivity.
Accounts payable increased $45.5 million from 1993 to 1994 primarily due to
an increase in operating expenses and the timing of cash disbursements.
Long-term debt increased $48.0 million from 1993 to 1994 primarily
resulting from reclassification of a portion of short-term debt to long-
term due to the January 1995 issuance of Series HH First Mortgage Bonds
(see Note 4 of Notes to the Consolidated Financial Statements for
additional information). Postretirement and other benefit obligations in-
creased $29.1 million from 1993 to 1004, of which $18.7 million is due to
the Company's assumption of Central Telephone Company of Florida's,
an affiliate Company postretirement benefits obligation (see Note 2 to the
Consolidated Financial Statements for additional information).
Results of Operations
---------------------
Local service revenues are derived from providing telephone exchange
services. Local service revenues increased in 1994 and 1993 primarily due
to increases in basic area service revenues reflecting access line growth
of approximately 67,000 or 5.5 percent and 62,000 or 5.3 percent,
respectively. Also contributing to the increases in both 1994 and 1993
were increases in revenue for custom calling features, Centrex and Touch-
Tone services. Inside wire maintenance revenue increased due to increased
rates effective July 1, 1994, and telephone lease revenue increased due to
higher customer demand.
Network access service revenues are derived from billing other carriers and
telephone customers for their use of the local network to complete long
distance calls in those instances where long distance service is not
provided entirely by the Company. Network access service revenues
increased $11.4 million in 1994 compared to 1993 primarily due to increased
minutes of use and customer activity net of rate reductions which went into
effect July 1, 1994. Network access revenues decreased slightly in 1993
compared to 1992 due to decreases in transitional support payments received
from the National Exchange Carrier Association and decreased interstate
rates.
Long distance service revenues are derived principally from providing long
distance services within designated areas. Revenues decreased in 1994
primarily due to rate reductions effective July 1, 1994 and the Company's
exit from the intraLATA toll private line pool in June 1993. The 1993
decrease in long distance service revenues is due to lower message volumes
over 1992 as well as reduced toll private line revenue associated with the
Company's exit from the pool.
II-4
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations (continued)
---------------------------------
Miscellaneous revenues include revenues related to directory publishing
fees, providing billing and collection services and operator services for
interexchange carriers, sales of telecommunications equipment and leasing
of network facilities. Miscellaneous revenues increased in 1994 and 1993
primarily due to an increase in directory revenues and increases in demand
for PBX, key systems, data equipment, messageline and telephone
instruments.
Plant expense increased in 1994 primarily due to increased access line
movement and increased repairs of cable and wire and building maintenance
required as a result of inclement weather. In 1993 plant expense decreased
primarily due to reduced central office SS7/ExpressTouch related expenses
compared to the level of such costs in 1992.
Depreciation expense increased $19 million for the twelve months ended
December 31, 1994 due in part to asset base growth between 1993 and 1994.
Also contributing to this increase were one-time depreciation charges in
the amount of $6.0 million approved by the FPSC during 1994. Depreciation
expense decreased in 1993 primarily due to a change in depreciation rates
which went into effect on July 1, 1992.
Customer operations expense increased in 1994 and 1993 primarily due to
increases in sales salaries, commissions and related expenses associated
with the marketing of new products and services.
Corporate operations expense increased in 1994 and 1993 primarily due to
increases in the cost of information management systems. Increases in 1993
are also attributed to increases in advertising.
Other operating expenses increased in 1994 and 1993 primarily due to the
cost of goods related to equipment sales due to a higher demand for PBXs,
key systems, and telephone instruments.
Nonoperating Items
------------------
The decrease in interest charges in 1994 and 1993 was primarily due to the
lower interest rate on long term debt that was refinanced during 1994, 1993
and 1992.
The Company incurred extraordinary charges related to the early
extinguishments of debt of $215,000, $1.4 million and $1.5 million, net of
related income tax benefits, in 1994, 1993, and 1992, respectively.
Effects of Inflation
The effects of inflation on the operations of the Company were not
significant during 1994, 1993 or 1992.
II-5
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Accounting Developments
-----------------------
Effective Janaury 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits" (see Note 2 of Notes to Consolidated Financial
Statements for additional information).
Consistent with most local exchange carriers, the Company accounts for the
economic effects of regulation pursuant to SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation". The application of SFAS No. 71
requires the accounting recognition of the rate actions of regulators where
appropriate, including the recognition of depreciation based on estimated
useful lives prescribed by regulatory commissions rather than those which
might be utilized by non-regulated enterprises. The Company currently
believes its operations meet the criteria for the continued application of
the provisions of SFAS No. 71. However, the Company operates in an
evolving environment in which the regulatory framework is changing and the
level and types of competition are increasing. Accordingly, the Company
constantly monitors and evaluates the ongoing applicability of SFAS No. 71
by assessing the likelihood that prices which provide for the recovery of
specific costs can continue to be charged to customers.
In the event the Company determines that its operations no longer qualify
for the application of the provisions of SFAS No. 71, the Company would
eliminate from its financial statements the effects of any actions of
regulators that had been recognized as assets and liabilities. The
resulting material, noncash charge would be recorded as an extraordinary
item. (See Note 7 of Notes to Consolidated Financial Statements for
information regarding the primary components and estimated amounts of
regulatory assets and liabilities as of December 31, 1994.)
II-6
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Pages
-----
Report of Independent Auditors II-8
Consolidated Balance Sheets
as of December 31, 1994 and 1993 II-9 - II-10
Consolidated Statements of Income
for each of the three years ended December 31, 1994 II-11
Consolidated Statements of Retained Earnings
for each of the three years ended December 31, 1994 II-12
Consolidated Statements of Cash Flows
for each of the three years ended December 31, 1994 II-13
Notes to Consolidated Financial Statements II-14 - II-32
II-7
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART II
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
United Telephone Company of Florida
We have audited the accompanying consolidated balance sheets of United
Telephone Company of Florida, a wholly-owned subsidiary of Sprint
Corporation, as of December 31, 1994 and 1993, and the related consolidated
statements of income, retained earnings, and cash flows for each of the
three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item
14(a)2. These financial statements and the schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of United
Telephone Company of Florida at December 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, United
Telephone Company of Florida changed its method of accounting for
postretirement benefits in 1993.
ERNST & YOUNG LLP
Kansas City, Missouri
January 25, 1995
II-8
<TABLE> PART II.
Item 8.
UNITED TELEPHONE COMPANY OF FLORIDA
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 and 1993
(In Thousands)
<CAPTION>
ASSETS 1994 1993
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $ 9,473 $ 2,353
Receivables:
Interexchange carriers 36,993 34,919
Customers and other 78,805 68,475
Unbilled toll 22,597 22,179
Affiliated companies 26,844 9,262
Allowance for uncollectible account (3,318) (2,857)
Inventories 27,426 22,790
Prepayments 6,158 1,311
Deferred tax asset 8,801 10,305
------- -------
213,779 168,737
PROPERTY, PLANT AND EQUIPMENT
Land and buildings 149,033 146,377
Telephone network equipment and outside 2,160,156 2,085,478
Other 127,453 108,911
Construction in progress 40,954 30,195
--------- ---------
2,477,596 2,370,961
Less accumulated depreciation 1,076,007 978,993
--------- ---------
1,401,589 1,391,968
DEFERRED CHARGES AND OTHER ASSETS 49,926 51,378
--------- ---------
$ 1,665,294 $ 1,612,083
========= =========
See Accompanying Notes to Consolidated Fianancial Statements
II-9
PART II.
Item 8.
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
---- ----
CURRENT LIABILITIES
<S>
Outstanding checks in excess of cash <C> <C>
balances $ 3,215 $ 4,187
Commercial paper 39,809 67,210
Current maturities of long-term debt 4,467 273
Accounts payable:
Interexchange carriers 56,170 37,926
Affiliated companies 39,816 27,032
Other 33,616 19,191
Advance billings 15,883 15,429
Accrued merger and integration costs 6,373 16,074
Customer deposits 7,414 7,717
Accrued interest 7,514 7,828
Accrued vacation pay 15,382 11,592
Accrued taxes 4,350 13,763
Other 16,352 11,623
------- -------
250,361 239,845
LONG-TERM DEBT 439,495 391,525
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 196,139 194,347
Deferred investment tax credits 19,636 22,913
Postretirement and other benefit
obligations 46,712 17,572
Regulatory liability 11,143 14,505
Other 6,471 14,185
------- --------
280,101 263,522
REDEEMABLE PREFERRED STOCK
Series 1959, at redemption value 340 360
Series 1961, at redemption value 108 126
Series 1966, at redemption value 1,531 1,601
----- -----
1,979 2,087
COMMON STOCK AND OTHER STOCKHOLDER'S EQUITY
Common stock, authorized 16,000,000 shares,
par value $2.50, issued and outstanding 16,250 16,250
Capital in excess of par value 166,448 166,448
Retained earnings 510,660 532,406
----------- ----------
693,358 715,104
----------- ----------
$ 1,665,294 $ 1,612,083
========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
II-10
<TABLE> PART II.
Item 8.
UNITED TELEPHONE COMPANY OF FLORIDA
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(In Thousands)
<CAPTION>
1994 1993 1992
---- ---- ----
OPERATING REVENUES
<S> <C> <C> <C>
Local service $ 340,887 $ 309,310 $ 279,161
Network access service 320,586 309,221 309,759
Long distance service 83,112 84,217 90,041
Miscellaneous 120,613 99,620 81,944
------- ------- ------
865,198 802,368 760,905
OPERATING EXPENSES
Plant expense 232,302 215,009 222,356
Depreciation 169,326 150,233 161,471
Customer operations 118,383 110,385 91,359
Corporate operations 83,876 75,224 68,220
Merger and integration costs - 51,080 -
Other operating expenses 26,023 19,944 8,154
Taxes:
Federal income:
Current 58,933 38,536 38,242
Deferred 28 1,011 8,293
Deferred investment (3,134) (3,471) (4,142)
State, local and miscellaneous 34,356 30,168 31,233
------ ------ ------
720,093 688,119 625,186
OPERATING INCOME 145,105 114,249 135,719
INTEREST CHARGES
Interest on long-term debt 30,897 34,363 36,232
Interest on short-term debt 1,718 1,101 281
Other interest 2,865 924 1,428
----- ----- ------
35,480 36,388 37,941
OTHER INCOME
Interest charged to construction 561 369 1,154
Interest income 62 512 186
----- ---- -----
623 881 1,340
INCOME BEFORE EXTRAORDINARY ITEM 110,248 78,742 99,118
Extraordinary charges on early
extinguishments of debt, net of
related income tax benefits (215) (1,421) (1,497)
------- ------- -------
NET INCOME $ 110,033 $ 77,321 $ 97,621
======= ====== ======
</TABLE> See Accompanying Notes to Consolidated Financial Statements.
II-11
UNITED TELEPHONE COMPANY OF FLORIDA PART II.
CONSOLIDATED STATEMENTS OF RETAINED EARNING Item 8.
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(In Thousands)
<TABLE>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 532,406 $ 520,895 $ 503,866
Net income 110,033 77,321 97,621
Cash dividends:
Common stock (131,675) (65,700) (79,625)
Preferred stock (104) (110) (675)
Early retirement of preferred stock - - (292)
------- -------- --------
Balance at end of year $ 510,660 $ 532,406 $ 520,895
======= ======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
II-12
UNITED TELEPHONE COMPANY OF FLORIDA PART II.
CONSOLIDATED STATEMENTS OF CASH FLOWS Item 1.
YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(In Thousands)
<TABLE>
<CAPTION> 1994 1993 1992
---- ---- ----
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 110,033 $ 77,321 $ 97,621
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 169,326 150,233 161,471
Extraordinary charges on early
extinguishments of debt 349 2,294 2,400
Increase (decrease) in deferred
income taxes and net investment
tax credit (1,708) (396) 8,094
Changes in operating assets
and liabilities:
Increase in accounts receivable (29,943) (12,622) (3,459)
Increase in inventories (4,636) (1,061) (161)
(Increase) decrease in prepayments (4,847) 1,459 (1,109)
Increase in accounts payable,
accrued expenses and other 33,723 23,395 2,253
Increase (decrease) in noncurrent assets
and liabilities, net 20,668 12,372 (5,782)
Other, net 843 883 671
-------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 293,808 253,878 261,999
INVESTING ACTIVITIES
Additions to property, plant and equipment (177,828) (185,002) (184,692)
Net salvage from plant and equipment ret (1,119) (876) 3,839
--------- -------- ---------
NET CASH USED BY INVESTING ACTIVITIES (178,947) (185,878) (180,853)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 70,000 202,772 49,423
Principal payments and retirements of long-
term debt (18,315) (211,984) (68,189)
Increase (decrease) in short-term borrowings (27,401) 15,510 29,470
Redemption of preferred stock (108) (107) (7,724)
Premiums on early redemption of long-term debt (138) (9,011) (2,069)
Dividends paid (131,779) (65,810) (80,300)
Additions to unamortized debt expense - (1,943) (552)
--------- -------- --------
NET CASH USED BY FINANCING ACTIVITIES (107,741) (70,573) (79,941)
INCREASE (DECREASE) IN CASH 7,120 (2,573) 1,205
CASH AT BEGINNING OF YEAR 2,353 4,926 3,721
----- ----- -----
CASH AT END OF YEAR $ 9,473 $ 2,353 $ 4,926
===== ===== =====
See Accompanying Notes to Consolidated Financial Statements.
II-13
</TABLE>
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of United Telephone Company
of Florida is presented to assist in understanding the accompanying
consolidated financial statements. The consolidated financial statements
and notes are representations of management, which is responsible for their
integrity and objectivity. These accounting policies conform with
generally accepted accounting principles and reflect practices appropriate
to the industry in which United Telephone Company of Florida operates.
Basis of Presentation
---------------------
The accompanying consolidated financial statements include the accounts of
United Telephone Company of Florida and its wholly-owned subsidiary, United
Telephone Long Distance, Inc., collectively referred to as the "Company."
All significant intercompany transactions have been eliminated. The Company
is a wholly-owned subsidiary of Sprint Corporation (Sprint); accordingly,
earnings per share information has been omitted.
Certain amounts in the accompanying consolidated financial statements for
1993 and 1992 have been reclassified to conform to the presentation of
amounts in the 1994 consolidated financial statements. These
reclassifications had no effect on net income in either year.
Operations
----------
The company is engaged in the business of providing communication services,
principally local, network access and long distance services in Florida.
The Company accounts for the economic effects of regulation pursuant to
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
the Effects of Certain Types of Regulation" which requires the accounting
recognition of the rate actions of regulators where appropriate. Such
actions can provide reasonable assurance of the existence of an asset,
reduce or eliminate the value of an asset, or impose a liability on a
regulated enterprise.
Cash
----
As part of its cash management program, the Company utilizes controlled
disbursement banking arrangements. Outstanding checks in excess of cash
balances are reflected as a current liability on the balance sheet. The
company had sufficient funds available to fund these outstanding checks
when they were presented for payment.
II-14
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventories
-----------
Inventories consist of materials and supplies stated at average cost and
equipment held for resale stated at the lower of average cost or market.
The sales inventory balances were $11,494,000 and $11,379,000 at December
31, 1994 and 1993, respectively.
Property, Plant and Equipment
-----------------------------
Property, plant and equipment are recorded at cost. Retirements of
depreciable property are charged against accumulated depreciation with no
gain or loss recognized. Repairs and maintenance costs are expensed as
incurred.
Depreciation
------------
Depreciation expense is computed on a straight-line basis over estimated
useful lives as prescribed by regulatory commissions. Depreciation rate
and recovery schedule changes granted by the Florida Public Service
Commission (FPSC) resulted in a decrease of depreciation expense in 1993
of $9.3 million and an increase of $13.6 million in 1992. After the related
effects on revenues and income taxes, the 1993 rate change increased net
income by $4.9 million and the 1992 rate change decreased net income by
$7.1 million. In 1994, the FPSC ordered the Company to record two
nonrecurring charges to depreciation expense totaling $6 million. After
the related effects on revenues and income taxes, these one-time charges
reduced net income by $2.7 million in 1994. Average annual composite
depreciation rates, excluding the nonrecurring charges, were 6.8 percent
for 1994, 6.7 percent for 1993 and 7.6 percent for 1992.
Income Taxes
------------
Operations of the Company are included in the consolidated federal income
tax returns of Sprint. Federal income tax is calculated by the Company on
the basis of its filing a separate return.
Investment tax credits (ITC) have been deferred and are being amortized
over the useful life of the related property.
II-15
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Interest Charged to Construction
--------------------------------
In accordance with the Uniform System of Accounts, as prescribed by the
Federal Communications Commission (FCC), interest has been capitalized on
those telephone plant construction projects for which the estimated
construction period exceeds one year. In May 1994, the FPSC staff, citing
the immateriality of such interest due to reductions in long-term
construction projects in the telecommunications industry, filed comments
with the FCC supporting the elimination of interest charged to
construction. In addition, the FPSC directed several Florida LECs, the
Company included, to cease recognizing interest charged to construction
effective November 1, 1994.
2. EMPLOYEE BENEFITS PLANS
Effective January 1, 1994, as a result of the Sprint/Centel merger,
employees of Central Telephone Company of Florida, an affiliate, are
considered employees of the Company. As a result, the Company has assumed
the liability for postretirement benefits in the amount of $16.2 million in
addition to prepaid pension costs of $2.5 million related to Central
Telephone Company of Florida's active employees and retirees.
Defined Benefit Pension Plan
----------------------------
Substantially all employees of the Company are covered by a noncontributory
defined benefit pension plan. For participants of the plan represented by
collective bargaining units, benefits are based upon schedules of defined
amounts as negotiated by the respective parties. For participants not
covered by collective bargaining agreements, the plan provides pension
benefits based upon years of service and participants' compensation.
The Company's policy is to make contributions to the plan each year equal
to an actuarially determined amount consistent with applicable federal tax
regulations. The funding objective is to accumulate funds at a relatively
stable rate over the participants' working lives so that benefits are fully
funded at retirement. As of December 31, 1994, the plan's assets consisted
principally of investments in corporate equity securities and U.S.
government and corporate debt securities.
II-16
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
2. EMPLOYEE BENEFIT PLANS (continued)
Defined Benefit Pension Plan (continued)
----------------------------------------
<TABLE>
The components of the net pension credits and related assumptions are as
follows (in thousands):
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits $ 7,520 $ 6,011 $ 5,080
earned during the period
Interest cost on projected
benefit obligation 18,499 12,324 11,490
Actual return on plan assets (176) (35,481) (13,133)
Net amortization and deferral (29,481) 8,715 (9,435)
-------- ------- -------
Net pension credit $ (3,638) $ (8,431) $ (5,998)
======= ======= =======
Discount rate 7.50% 8.00% 8.50%
Expected long-term rate of
return on plan assets 9.50% 9.50% 8.25%
Anticipated composite rate
of future increases in
compensation 4.50% 5.50% 6.33%
</TABLE>
In addition, the Company recognized pension curtailment gains of $115,000
during 1993 as a result of the merger/integration and restructuring actions
as discussed in Note 9.
II-17
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
2. EMPLOYEE BENEFIT PLANS (continued)
Defined Benefit Pension Plan (continued)
<TABLE>
The funded status and amounts recognized in the consolidated balance sheets
for the plan, as of December 31, are as follows (in thousands):
<CAPTION> 1994 1993
---- ----
Actuarial present value of pension obligations:
<S> <C> <C>
Vested benefit obligation $(204,891) $ (151,220)
========= =========
Accumulated benefit obligation $(221,888) $ (172,642)
========= =========
Projected benefit obligation $ (234,607) $ (184,643)
Plan assets at fair value 316,249 290,557
------- -------
Plan assets in excess of the
projected benefit obligation 81,642 105,914
Unrecognized net gains (35,597) (41,400)
Unrecognized prior service cost 20,165 1,369
Unamortized portion of trasitional asset (35,717) (36,540)
-------- --------
Prepaid pension cost $ 30,493 $ 29,343
====== ======
</TABLE>
The projected benefit obligations as of December 31, 1994 and 1993 were
determined using discount rates of 8.5 percent and 7.5 percent,
respectively, and anticipated composite rates of future increases in
compensation of 5.0 percent and 4.5 percent, respectively.
II-18
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
2. EMPLOYEE BENEFIT PLANS (continued)
Defined Contribution Plans
--------------------------
Sprint sponsors three defined contribution employee savings plans covering
substantially all employees of the Company. Participants may contribute
portions of their compensation to the plans. Contributions of participants
represented by collective bargaining units are matched by the Company based
upon defined amounts as negotiated by the respective parties.
Contributions of participants not covered by collective bargaining
agreements are also matched by the Company. For these participants, the
Company provides matching contributions equal to 50 percent of
participants' contributions up to 6 percent of their base compensation and
may, at the discretion of Sprint's Board of Directors, provide additional
matching contributions based upon the performance of Sprint's common stock
price in comparison to other telecommunications companies. The Company's
matching contributions aggregated approximately $5,300,000 in 1994,
$3,800,000 in 1993 and $2,800,000 in 1992.
Postretirement Benefits
-----------------------
Sprint sponsors postretirement benefits (principally health care benefits)
arrangements covering substantially all employees of the Company. Employees
who retired from the Company before specified dates are eligible for these
postretirement benefits at a very limited cost to the retirees. Employees
retiring after specified dates are eligible for these benefits on a shared
cost basis. The Company funds the accrued costs as benefits are paid.
Effective January 1, 1993, the Company changed its method of accounting for
postretirement benefits by adopting SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." As permitted by SFAS No.
106, the Company elected to recognize the obligation for postretirement
benefits already earned by its current retirees and active work force as of
January 1, 1993, by amortizing such obligation on a straight-line basis
over a period of twenty years. For regulatory purposes, the FCC and the
FPSC permit recognition of net postretirement benefit cost, including
amortization of the transition obligation, in accordance with SFAS No. 106.
II-19
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
2. EMPLOYEE BENEFIT PLANS (continued)
Postretirement Benefits (continued)
-----------------------------------
During 1992, the costs of providing postretirement benefits to the
Company's retirees were expensed as such costs were paid.
<TABLE>
The components of the 1994 and 1993 net postretirement benefits cost are as
follows (in thousands):
<CAPTION> 1994 1993
---- ----
<S> <C> <C>
Service cost - benefits earned during the period $ 3,233 $ 2,207
Interest on accumulated benefit 9,039 7,579
Amortization of transition 5,452 4,854
Net amortization and deferral (1,057) _
------- -------
Net postretirement benefits cost $ 16,667 $ 14,640
====== ======
</TABLE>
For measurement purposes, weighted average annual health care cost trend
rates of 12 percent and 13 percent were assumed for 1994 and 1993,
respectively, gradually decreasing to 6 percent by 2001 and remaining
constant thereafter. The effect of a 1 percent annual increase in the
assumed trend rate would have increased the 1994 net postretirement
benefits cost by approximately $3,800,000. The discount rates for 1994 and
1993 were 7.5 percent and 8.0 percent, respectively.
In addition, the Company recognized postretirement benefits curtailment
losses of $5,632,000 during 1993 as a result of the integration actions as
discussed in Note 9.
The cost of providing postretirement benefits was approximately $2,500,000
in 1992.
II-20
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
2. EMPLOYEE BENEFIT PLANS (continued)
Postretirement Benefits (continued)
-----------------------------------
<TABLE>
The amounts recognized in the consolidated balance sheets as of December 31
are as follows (in thousands):
<CAPTION> 1994 1993
---- -----
Accumulated postretirement benefits obligations
<S> <C> <C>
Retirees $ 51,697 $ 44,634
Active plan participants - fully eligible 20,148 18,512
Active plan participants - other 38,315 24,458
------ ------
110,160 87,604
Unrecognized net gains 35,080 21,735
Unrecognized transition obligation (98,528) (91,980)
-------- --------
Accrued postretirement benefits $ 46,712 $ 17,359
====== ======
</TABLE>
The accumulated benefits obligations as of December 31, 1994 and 1993 were
determined using discount rates of 8.5 percent and 7.5 percent,
respectively. An annual health care cost trend rate of 12 percent was
assumed for 1995, gradually decreasing to 6 percent by 2001 and remaining
constant thereafter. The effect of a 1 percent annual increase in the
assumed health care cost trend rate would have increased the accumulated
benefits obligation as of December 31, 1994 by approximately $13,300,000.
Postemployment Benefits
-----------------------
Effective January 1, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." Upon adoption, the Company
recognized certain previously unrecorded obligations for benefits being
provided to former or inactive employees and their dependents, after
employment but before retirement. The resulting charge did not
significantly impact the Company's 1994 net income. Such postemployment
benefits offered by the Company include severance, disability and workers
compensation benefits, including the continuation of other benefits such as
health care and life insurance coverage.
II-21
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
3. INCOME TAXES
<TABLE>
The components of federal and state income tax expense are as follows (in
thousands):
1994 1993 1992
<S> ---- ---- ----
Federal Income Tax <C> <C> <C>
Current $58,933 $38,536 $38,242
Deferred 28 1,011 8,293
Amortization of deferred ITC (3,134) (3,471) (4,142)
------ ------- -------
55,827 36,076 42,393
State Income Tax ------ ------ ------
Current 8,467 4,879 4,587
Deferred 1,398 2,064 3,943
------ ----- -----
9,865 6,943 8,530
------ ----- ------
Total income tax expense $65,692 $43,019 $50,923
====== ======= =======
In 1994, 1993, and 1992 income tax benefits of $134,000, $873,000, and
$903,000, respectively, associated with the extraordinary charges incurred
related to the early extinguishments of debt were reflected as reductions
of such charges in the consolidated statements of income.
II-22
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TOCONSOLIDATED FINANACIALSTATEMENTS
DECEMBER 31, 1994
3. INCOME TAXES (continued)
</TABLE>
<TABLE>
The differences which cause the effective income tax rate to vary from the
statutory federal income tax rate of 35 percent in 1994 and 1993 and 34
percent in 1992 are as follows (in thousands):
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net income $110,033 $ 77,321 $ 97,621
Add back extraordinary item 215 1,421 1,497
Add income tax including net ITC 65,692 43,019 50,923
------ ------ ------
Income before extraordinary
item and income tax $175,940 $121,761 $150,041
======= ======= =======
Federal income tax at the
statutory rate $ 61,579 $ 42,616 $ 51,014
Less amortization of deferred ITC 3,134 3,471 4,142
----- ----- -----
Expected federal income tax
amortization of deferred ITC 58,445 39,145 46,872
Effect of:
Book depreciation applicable
to items previously deducted for
tax purposes 1,168 710 808
Deferred taxes reversing at
prior year rates (1,313) (2,400) (3,647)
State income tax, net of
federal income tax effect 6,412 4,513 5,630
Other, net 980 1,051 1,260
---- ----- -----
Income tax expense, including
net ITC $ 65,692 $ 43,019 $ 50,923
====== ====== ======
Effective income tax rate 37.34% 35.33% 33.94%
===== ===== =====
</TABLE>
II-23
UNITED TELEPHONE COMPANY OF FLORIDA
NOTES TOC CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
3. INCOME TAXES (continued)
Deferred income taxes are provided for the temporary differences between
the carrying amounts of the Company's assets and liabilities for financial
statement purposes and their tax bases. The sources of the differences
that give rise to the deferred income tax assets and liabilities as of
December 31, 1994 and 1993 along with the income tax effect of each, are as
follows (in thousands):
[CAPTION]
<TABLE> 1994 1993
------------------- -------------------
Deferred Income Tax Deferred Income Tax
------------------- -------------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Property, plant and equipment $ - $ 213,812 $ - $ 194,004
Expense accruals 17,661 9,167 -
Deferred ITC - 19,636 - 22,913
Other, net 8,813 1,138 343
------ ------- ------ --------
$ 26,474 $ 233,448 $ 10,305 $ 217,260
====== ======= ====== =======
</TABLE>
On August 10, 1993, the Revenue Reconciliation Act of 1993 was enacted
which, among other changes, raised the federal income tax rate for
corporations to 35 percent from 34 percent, retroactive to January 1, 1993.
Pursuant to SFAS No. 71, the resulting adjustments to the Company's
deferred income tax assets and liabilities to reflect the revised rate have
generally been reflected as reductions to the related regulatory
liabilities.
II-24
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
4. LONG-TERM DEBT AND EXTRAORDINARY CHARGES ON EXTINGUISHMENTS
<TABLE>
Long-term debt at December 31, excluding current maturities and net of
related unamortized debt discount, is summarized below (in thousands):
<CAPTION>
1994 1993
-------------------------- ------------
Weighted average
Amount interest rate Amount
------ ---------------- ------------
<S>
First mortgage bonds, <C> <C> <C>
maturities 2003 to 2025 (1) $ 435,268 7.7% $ 389,975
First mortgage REA notes,
maturing 2002 126 2.0% 166
First mortgage Rural Telephone Bank
notes, maturing 2013 633 6.0% 665
Capital leases, 1996 to 2087 3,468 6.4% 719
________ ________
$ 439,495 $ 391,525
======== ========
(1) Includes $70 million of commercial paper reclassified to long-term at
December 31, 1994 as a result of its being replaced by the issuance of
Series HH 8.38 percent First Mortgage Bonds in January 1995.
</TABLE>
II-25
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
4. LONG-TERM DEBT AND EXTRAORDINARY CHARGES ON EXTINGUISHMENTS (continued)
<TABLE>
Long-term debt to be retired during each of the next five years is
summarized below (in thousands):
<CAPTION>
Weighted average
Year Amount interest rate
<S> <C> <C>
1995 $ 4,467 5.7%
1996 1,870 7.2%
1997 1,537 7.3%
1998 85 4.7%
1999 60 4.7%
</TABLE>
The first mortgage bonds and notes are secured by substantially all of the
Company's property, plant and equipment.
Under the most restrictive terms of the Company's first mortgage bond
indentures, $423,141,000 of retained earnings were restricted from payment
of dividends at December 31, 1994.
As of December 31, 1994, the Company had lines of credit with banks
totaling $120,000,000 of which $10,191,000 was unused. The bank lines,
which are renewable in May and June, 1995, provide for short-term
borrowings at market rates of interest and require annual commitment fees
based on the unused portion. Lines of credit, which support outstanding
commercial paper, may be withdrawn by the banks if there is a material
adverse change in the financial condition of the Company. The weighted
average interest rate on short-term borrowings for 1994 and 1993 is 4.56%
and 3.85%, respectively.
The Company is in compliance with all restrictive or financial covenants
relating to its debt arrangements at December 31, 1994.
II-26
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
4. LONG-TERM DEBT AND EXTRAORDINARY CHARGES ON EXTINGUISHMENTS (continued)
During 1994, the Company redeemed, prior to scheduled maturities, its
Winter Park 6.50 percent Series I Bonds for $2.5 million and a portion of
its 9.25 percent Series CC Bonds for $20.5 million which includes
principal, interest and redemption premiums. On January 15, 1995, the
Company issued Series HH 8.38 percent first mortgage bonds for $70 million
which was used to reduce short-term debt. During 1993, the Company
redeemed, prior to scheduled maturities, $211.3 million of first mortgage
bonds with interest rates ranging from 7.45 percent to 11.72 percent.
During 1992, the Company redeemed prior to scheduled maturities, $64
million of First Mortgage Bonds with interest rates ranging from 8 3/4
percent to 10 1/2 percent. Except for amounts deferred as allowed by the
FPSC, the prepayment penalties incurred in connection with the early
extinguishments of debt and the write off of related unamortized issuance
costs, net of the related income tax benefits, are reflected as
extraordinary charges in the 1994, 1993, and 1992 consolidated statements
of income.
As of December 31, 1994, $70 million of commercial paper is classified as
long-term debt due to the Company's January 1995 refinancing of such
borrowings on a long-term basis as noted above.
5. REDEEMABLE PREFERRED STOCK
<TABLE>
Authorized shares of all series of preferred stock are 1,500,000 shares.
The redeemable preferred stock outstanding, at redemption value, as of
December 31, is as follows (in thousands):
<CAPTION>
1994 1993
------------------ ----------------
Shares Amount Shares Amount
<S> ------ ------- ------ ------
Series 1959 - par value
$10, voting, cumulative <C> <C> <C> <C>
5.4% annual dividend rate 34,000 $ 340 36,000 $ 360
Series 1961 - par value
$10, voting, cumulative
5.25% annual dividend rate 10,800 108 12,600 126
Series 1966 - par value
$10, voting, cumulative
5% annual dividend rate 153,120 1,531 160,080 1,601
----- -----
$1,979 $2,087
===== =====
</TABLE>
II-27
UNITED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
5. REDEEMABLE PREFERRED STOCK (continued)
<TABLE>
In accordance with the terms of the preferred stock purchase agreements,
the following redemptions were made in 1994 and 1993, and are to be made
each year, at par value plus accrued dividends, until all shares have been
redeemed (in thousands):
<S> <C>
5.4%, Series 1959, 2,000
shares at $10 par value $ 20
5.25%, Series 1961, 1,800
shares at $10 par value 18
5%, Series 1966, shares at
$10 par value 70
------
$ 108
</TABLE> ===
In addition, on December 1, 1992 the Company redeemed all of its
outstanding 8.25% preferred stock at $103.09.
The Company may redeem additional shares of the 5.4 percent Series 1959
preferred stock and the 5.25 percent Series 1961 preferred stock at $10.20
per share. Additional shares of the 5 percent Series 1966 preferred stock
may be redeemed by the Company at $10 per share. In the event of default,
the holders of the redeemable preferred stock are entitled to elect a
majority of the directors until all dividends and sinking fund payments in
arrears have been paid. The preferred stock purchase agreements contain
provisions restricting the payment of cash dividends on common stock;
however, at December 31, 1994, the restriction under the Company's First
Mortgage Bond indentures as described in Note 4 was more restrictive.
II-28
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
6. COMMITMENTS AND CONTINGENCIES
Gross rental expense aggregated $10,265,000 in 1994, $8,543,000 in 1993 and
$7,008,000 in 1992. Minimum rental commitments as of December 31, 1994 for
non-cancelable operating leases are not significant.
The Company's planned capital expenditures for the year ending December 31,
1995 are approximately $182,000,000. Normal purchase commitments have been
or will be made for these planned expenditures.
On January 10, 1994, the Company was sent a letter from AT&T claiming that
the Company was liable, under certain billing agreements, for the refund of
approximately $7 million, plus interest, of gross receipts taxes collected
and remitted on behalf of AT&T to the Florida Department of Revenue. The
claim was subsequently dismissed without the necessity of a refund.
7. REGULATORY ACCOUNTING
Consistent with most local exchange carriers, the Company accounts for the
economic effects of regulation pursuant to SFAS No. 71. The application of
SFAS No. 71 requires the accounting recognition of the rate actions of
regulators where appropriate, including the recognition of depreciation
based on estimated useful lives prescribed by regulatory commissions rather
than those that might be utilized by non-regulated enterprises. The
Company currently believes its operations meet the criteria for the
continued application of the provisions of SFAS No. 71. However, the
Company operates in an evolving environment in which the regulatory
framework is changing and the level of competition is increasing.
Accordingly, the Company constantly monitors and evaluates the ongoing
applicability of SFAS No. 71 by assessing the likelihood that prices which
provide for the recovery of specific costs can continue to be charged to
customers.
The approximate amount of the Company's net regulatory assets at December
31, 1994 was between $100 million and $200 million consisting primarily of
property, plant and equipment and deferred debt issuance costs. The
estimate for property, plant and equipment was calculated based upon a
projection of useful remaining lives which are affected by the development
of competition, changes in regulation, and the expansion of broadband
services to be offered to customers.
II-29
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
8. RELATED PARTY TRANSACTIONS
The Company purchases telecommunications equipment, construction and
maintenance equipment, materials and supplies from its affiliate, North
Supply Company. Total purchases for 1994, 1993 and 1992 were $72,060,000,
$67,889,000 and $59,980,000, respectively.
Under an agreement with Sprint, the Company receives, at cost, consulting
and advisory management services. In addition, certain corporate expenses
and a credit resulting from deferred income taxes on intercompany profits
are also allocated by Sprint to affiliated companies. Total charges
aggregated $39,742,000 in 1994, $45,369,000 in 1993, and $45,108,000 in
1992, and the credit relating to deferred income taxes was $1,089,000 and
$1,172,000 in 1993 and 1992, respectively. The credit relating to deferred
income taxes was eliminated in 1994. The Company reimburses Sprint for
certain data processing services and other data related costs which are
incurred for the Company's benefit. Such charges, which approximate the
cost of such services as determined by Sprint, aggregated $22,704,000,
$21,367,000 and $19,712,000 in 1994, 1993, and 1992, respectively. The
Company enters into cash advance and borrowing transactions with Sprint;
generally, interest is computed based on the prior month's thirty-day
average commercial paper index, as published in the Federal Reserve
Statistical Release H.15 plus 15 basis points. Interest expense on such
advances from Sprint was $42,000, $46,000 and $445,000 in 1994, 1993 and
1992, respectively. Interest income on such advances to Sprint was
$15,000, $3,000 and $93,000 in 1994, 1993, and 1992, respectively.
The Company provides various services to Sprint, such as facilities rental,
postage, house services, company official toll and other miscellaneous
items. The Company received $7,314,000, $11,625,000 and $11,449,000 in
1994, 1993, and 1992, respectively, for such services.
Sprint Publishing & Advertising, an affiliate, pays the Company a fee for
the right to publish telephone directories in the Company's operating
territory, a listing fee, and a fee for billing and collection service
performed for Sprint Publishing & Advertising by the Company. For 1994,
1993 and 1992, Sprint Publishing & Advertising paid the Company a total of
$49,122,000, $45,458,000, and $41,672,000, respectively. The Company paid
Sprint Publishing & Advertising $3,634,000, $3,451,000, and $2,904,000 in
1994, 1993, and 1992, respectively, for its costs of publishing the white
page portion of the directories.
II-30
UNITIED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANACIAL STATEMENTS
DECEMBER 31, 1994
8. RELATED PARTY TRANSACTIONS (continued)
The Company provides various services to Sprint's long distance
communications services division, such as network access, operator and
billing and collection services, and the lease of network facilities. The
Company received $29,656,000, $25,171,000 and $22,761,000 in 1994, 1993 and
1992, respectively, for these services. The Company paid Sprint's long
distance communications services division $11,528,000, $13,863,000 and
$13,703,000 in 1994, 1993 and 1992, respectively, for interexchange
telecommunication services.
The Company is reimbursed by affiliated companies for certain salaries and
other costs which are incurred by the Company for the affiliates' benefit.
Also, the Company reimburses affiliated companies for charges incurred by
the affiliates for the Company's benefit. The reimbursable charges approx-
imate the cost of such items as determined by the Company and the affiliates.
Such amounts reimbursed to the Company, net of reimbursements paid, aggregate
approximately $64 million and $2 million in 1994 and 1993, respectively.
Certain directors and officers of the Company and Sprint are also directors
or officers of banks at which the Company conducts borrowings and related
transactions. The terms are comparable with other banks at which the
Company has similar transactions.
9. MERGER AND INTEGRATION COSTS
Effective March 9, 1993, Sprint consummated its merger with Centel
Corporation (Centel), a telecommunications company with local exchange and
cellular and wireless communications services operations. Centel's local
exchange telephone businesses operate in six states: Florida, North
Carolina, Virginia, Illinois, Texas, and Nevada. Pursuant to the Agreement
and Plan of Merger dated May 27, 1992, Sprint issued 1.37 shares of its
common stock in exchange for each outstanding share of Centel common stock.
The transaction costs associated with the merger (consisting primarily of
investment banking and legal fees) and the expenses of integrating and
restructuring the operations of the two companies (consisting primarily of
employee severance and relocation expenses and costs of eliminating
duplicative facilities) resulted in nonrecurring charges to Sprint during
1993. The portion of such charges attributable to the Company was $51
million, which reduced 1993 net income by approximately $31 million.
10. ADDITIONAL FINANCIAL INFORMATION
Major Customer Information
--------------------------
Consolidated operating revenues from AT&T resulting primarily from network
access, billing and collection services, and the lease of network
facilities aggregated approximately $172 million, $167 million and $173
million for 1994, 1993 and 1992, respectively.
II-31
UNITED TELEPHONE COMPANY OF FLORIDA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
The Company's customer and other accounts receivable are not subject to
significant concentration of credit risk due to the large number of
customers in the Company's customer base.
The principal industries in the Company's service area include the retail
trade and service industries.
10. ADDITIONAL FINANCIAL INFORMATION (continued)
Financial Instruments Information
The Company estimates the fair value of its financial instruments using
available market information and appropriate valuation methodologies.
Accordingly, the estimates presented herein are not necessarily indicative
of the values the Company could realize in a current market exchange.
Although management is not aware of any factors that would affect the
estimated fair value amounts presented as of December 31, 1994, such
amounts have not been comprehensively revalued for purposes of these
financial statements since that date, and therefore, estimates of fair
value subsequent to that date may differ significantly from the amounts
presented herein.
The Company's financial instruments primarily consist of long-term debt,
including current maturities, with carrying amounts as of December 31, 1994
and 1993 of $443,962,000, and $391,798,000, respectively, and estimated
fair values of $344,267,000 and $471,956,000, respectively. The fair
values are estimated based on quoted market prices for publicly-traded
issues, and based on the present value of estimated future cash flows using
a discount rate commensurate with the risks involved for all other issues.
The carrying values of the Company's other financial instruments
(principally short-term borrowings) approximate fair value as of December
31, 1994 and 1993.
The Company has not invested in derivative financial instruments.
11. SUPPLEMENTAL DISCLOSURE FOR STATEMENTS OF CASH FLOW
<TABLE>
Following are the supplemental disclosures required for the consolidated
statements of cash flows for the years ended December 31 (in thousands):
<CAPTION>
1994 1993 1992
---- ---- ----
Cash paid for:
<S> <C> <C> <C>
Interest, net of amount $34,749 $35,971 $37,558
capitalized
Income taxes $77,143 $38,656 $46,470
II-32
</TABLE>
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 10. (a) Directors of the Registrant
Rex E. Bond, age 67. Mr. Bond is President and Director of D & B
Enterprises, Inc., a real estate sales and development firm. He has held
the position of President for more than five years. In March 1993 he
retired from the position of General Manager of the Sun 'n Lake of Sebring
Improvement District, a political subdivision. He has been a Director of
the Company and/or predecessor companies since 1974.
Mitchell N. Drew, age 68. Mr. Drew retired from his position of director
in February 1995. He is a licensed real estate broker in Florida and
Alabama and, since 1993, has pursued this profession in commercial property
and business brokerage in Alabama. From December 1985 through October 1992
he was President, Chief Executive Officer and a Director of Bar-B-Q
Associates, Inc., a restaurant development corporation. He had been a
Director of the Company and/or predecessor companies since 1970.
Manuel A. Garcia III, age 51. In February 1995, Mr. Garcia was elected a
Director of the Company. Mr. Garcia purchased the Burger King franchise in
Central Florida in 1969 and the franchise in Tallahassee in 1988. He
developed Pebbles Restaurants, Harvey's Bistro, Manuel's on the 28th and
also operates Miami Subs Grill restaurants. He currently serves on the
board of the Foundation for Orange County Public Schools, is a national
director of Cities in Schools, and is a board member of the Florida State
University Seminole Boosters' Association and the FSU Golden Chiefs'
Society. Mr. Garcia owns 500 shares of Sprint Common Stock.
Maria E. Ibanez, age 41. In February 1995, Ms. Ibanez was elected a
Director of the Company. Since 1990, Ms. Ibanez has served as President
and Chief Executive Officer of International High Tech Marketing, a
computer distribution company. Prior to 1990, she served as President and
Chief Executive Officer of International Micro Systems, a distributor of
computers and related products throughout Latin America and the Carribean.
J. Darrell Kelley, age 52. In March 1994, Mr. Kelley was named President,
Chief Executive Officer and Director of the Company after having served
since 1989 as President and Chief Executive Officer of Sprint/United North
Central headquartered in Mansfield, Ohio. Mr. Kelley currently serves as
director of Barnett Bank of Central Florida, Peerless Machinery Corporation
in Sidney, Ohio, and Associated P&C Holding Company in Indianapolis,
Indiana. Mr. Kelley owns 38,938 shares of Sprint Common Stock, which does
not include 50,903 shares acquirable within 60 days under Sprint's stock
option plans.
III-1
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 10. (a) Directors of the Registrant (Continued)
Robert D. Mathews, Jr., age 68. Mr. Mathews serves on the advisory board
of Sun Bank of Ocala. Previously he was Director, Chairman of the Board
and Chief Executive Officer of Sun Bank of Ocala, a position he had held
for more than five years. Mr. Mathews has been a Director of the Company
and/or predecessor companies since 1975. Mr. Mathews owns 500 shares of
Sprint Common Stock.
D. Wayne Peterson, age 59. In November 1993, Mr. Peterson was elected a
Director of the Company. Mr. Peterson was named President and Chief
Operating Officer of Sprint's Local Telecommunications Division in July
1993 with responsibility for local telephone operations in 19 states,
Sprint Publishing & Advertising, North Supply Company, and the local
telecommunications division staff in Kansas City. Previously, Mr. Peterson
had been President of the Sprint/Mid-Atlantic Telecom operations since it
was formed in March 1993. Prior to that, he had been president for 13
years of Carolina Telephone & Telegraph Company, Sprint's local telephone
operation in North Carolina. Mr. Peterson owns 41,940 shares of Sprint
Common Stock, which does not include 45,403 shares acquirable within 60
days under Sprint's stock option plans.
Charles E. Rice, age 59. Mr. Rice serves as Chairman of the Board,
Director and Chief Executive Officer of Barnett Banks, Inc. (a bank holding
company), a position he has held for more than five years. Mr. Rice also
serves as a Director of Sprint and of CSX Corporation. He has been a
Director of the Company and/or predecessor companies since 1969. Mr. Rice
owns 3,000 shares of Sprint Common Stock, which does not include 10,500
shares acquirable within 60 days under Sprint's stock option plans.
Melvin T. Stith, age 48. In February 1995, Mr. Stith was elected a
Director of the Company. Since 1991, Mr. Stith has served as the Dean of
the College of Business at Florida State University. Prior to 1991, he was
Chairman and Professor of the Department of Marketing at Florida State
University.
Robert M. Taylor, age 53. Mr. Taylor is the Chairman and Chief Executive
Officer of South Seas Resorts Company and the Mariner Group, Inc.
(developers and managers of condominium, resort and other properties in
Southwest Florida), a position he has held for more than five years. He
serves as Director of First Independence Bank of Ft. Myers, Acme-Cleveland
Corporation and MIL-COM Electronics Corporation. Mr. Taylor was elected a
Director of the Company in February, 1993.
Donald R. Witter, Jr., age 68. Mr. Witter retired from his position of
director in February 1995. He serves as Chairman of the Board, President,
Chief Executive Officer and Director of First Federal Savings Bank of
Charlotte County, a position he has held for more than five years. Mr.
Witter had been a Director of the Company and/or predecessor companies
since 1972. Mr. Witter owns 1,973 shares of Sprint Common Stock.
III-2
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 10. (b) Executive Officers of the Registrant (who are not also
Directors)
Office Name Age
------ ----- ---
Vice President - Network D.H. Brennan (1) 51
Vice President and General Manager - J.T. Cascio (2) 39
Business Markets
Vice President - Human Resources T.L. Dellatorre (3) 47
Vice President - Consumer Markets J.C. Granger (4) 48
Vice President - Carrier and Enhanced G.H. Head (5) 43
Service Markets
Vice President - Law and External J.M. Johns (6) 49
Relations
Controller J.I. Lehman (7) 51
Vice President - Business Development R.D. McRae (8) 49
and Chief Financial Officer
Treasurer M.R. Mynatt (9) 48
Vice President - Employee/Workplace H.D. West (10) 63
Issues
(1)Mr. Brennan was elected Vice President - Network in September 1994. He
formerly served as Vice President - Network and Chief Information Officer
since April 1993, as Vice President - Network Planning & Engineering since
July 1990, and as Vice President - Engineering and Planning since 1985. Mr.
Brennan owns 4,155 shares of Sprint Common Stock which does not include
22,250 shares acquirable within 60 days under Sprint's stock option plans.
(2)Mr. Cascio was elected Vice President and General Manager - Business
Markets in June 1994. Prior to that time he served as Director - Sales and
Service at Sprint/Mid-Atlantic Telecom. Before joining Sprint in 1991, Mr.
Cascio served in a number of marketing positions in the United States and
Europe with the Rolm Corporation. Mr. Cascio owns 356 shares of Sprint
Common Stock which does not include 939 shares acquirable within 60 days
under Sprint's stock option plans.
(3)Mr. Dellatorre was elected Vice President - Human Resources in September
1994. He formerly served as Vice President - Human Resources and Corporate
Communications since April 1993 and as Vice President - Administration
since November 1992. Previously he served as Vice President -
Administration for United Telephone Company of Ohio, an affiliate of the
Company, since May 1990. From 1987 to May 1990, he served as Assistant
Vice President - Human Resources at United Telephone Company of Ohio. Mr.
Dellatorre owns 3,776 shares of Sprint Common Stock, which does not include
11,000 shares acquirable within 60 days under Sprint's stock option plans.
III-3
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 10. (b) Executive Officers of the Registrant (who are not also
Directors)
(4)Mr. Granger was elected Vice President - Consumer Markets in April 1993.
He formerly served as Vice President - Marketing since February 1990 after
joining the Company as Assistant Vice President - Marketing in July 1989.
Previously, he served as National Accounts Manager for American Telephone &
Telegraph from 1987 to June 1989. Mr. Granger owns 990 shares of Sprint
Common Stock which does not include 2,375 shares acquirable within 60 days
under Sprint's stock option plans.
(5)Mr. Head was elected Vice President - Carrier and Enhanced Service
Markets in April 1993. Previously, he served as Vice President - Carrier
Services for Sprint's Local Telecommunications Division since August 1991.
He also served as Vice President - Marketing from 1989 to 1991 for United
Telephone Midwest Group. Mr. Head owns 4,308 shares of Sprint Common
Stock, which does not include 10,624 shares acquirable within 60 days under
Sprint's stock option plans.
(6)Mr. Johns was elected Vice President - Law and External Relations in
September 1994. He formerly served as Vice President - Law and Government
Relations since April 1993 and as Vice President - General Counsel and
Secretary since January 1985. Mr. Johns owns 11,001 shares of Sprint
Common Stock, which does not include 17,000 shares acquirable within 60
days under Sprint's stock option plans.
(7)Mr. Lehman was elected Controller in 1982. Mr. Lehman owns 8,052 shares
of Sprint Common Stock which does not include 1,188 shares acquirable
within 60 days under Sprint's stock option plan.
(8)Mr. McRae was elected Vice President - Business Development and Chief
Financial Officer in April 1993. He formerly served as Vice President -
Finance since May 1985. Mr. McRae owns 11,086 shares of Sprint Common
Stock which does not include 18,000 shares acquirable within 60 days under
Sprint's stock option plans.
(9)Mr. Mynatt was elected Treasurer in March 1985 and owns 3,404 shares of
Sprint Common Stock which does not include 377 shares acquirable within 60
days under Sprint's stock option plan.
(10)Mr. West was elected Vice President - Employee/Workplace Issues in April
1993. He formerly served as Vice President - Human Resources since 1984.
He will retire from the Company in April 1995. Mr. West owns 24,551 shares
of Sprint Common Stock which does not include 9,875 shares acquirable
within 60 days under Sprint's stock option plans.
III-4
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 10. (b) Executive Officers of the Registrant (who are not also
Directors)
There are no known family relationships between any of the above listed
directors or executive officers of the Company.
Directors and executive officers are elected annually. The next election
is scheduled for February 1996.
All directors and executive officers as a group own 160,753 shares of
Sprint Common Stock, which does not include 200,434 shares acquirable
within 60 days under Sprint's stock option plans. Such ownership
represents less than 1% of the class.
On October 16, 1991, Mr. Drew filed a petition under Chapter 11 of the U.S.
Bankruptcy laws; Bar-B-Q Associates, Inc., of which Mr. Drew was President
and CEO, also filed under Chapter 11 on that date. This petition was
converted to Chapter 7 on October 6, 1992.
No events have occurred during the last five years which are material to an
evaluation of the ability and integrity of any of the above listed
directors or executive officers of the Company.
III-5
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11. Executive Compensation
Pension Plans
<TABLE>
The following table reflects the estimated annual pension benefit payable
to an individual retiring in 1994 at age 65. The amounts include all
prospective benefits under Sprint's plans, whether tax-qualified or not.
<CAPTION> Pension Plan Table
Years of Service (2) (3)
--------------------------------------------
15 20 25 30 35
--- -- -- -- --
Remuneration (1)
----------------
<S> <C> <C> <C> <C> <C>
$125,000 $27,834 $37,112 $46,390 $55,668 $64,946
150,000 33,647 44,862 56,078 67,293 78,509
175,000 39,459 52,612 65,765 78,918 92,071
200,000 45,272 60,362 75,453 90,543 105,634
225,000 51,084 68,112 85,140 102,168 119,196
250,000 56,897 75,862 94,828 113,793 132,759
275,000 62,709 83,612 104,515 125,418 146,321
300,000 68,522 91,362 114,203 137,043 159,884
325,000 74,334 99,112 123,890 148,668 173,446
350,000 80,147 106,862 133,578 160,293 187,009
375,000 85,959 114,612 143,265 171,918 200,571
400,000 91,772 122,362 152,953 183,543 214,134
425,000 97,584 130,112 162,640 195,168 227,696
450,000 103,397 137,862 172,328 206,793 241,259
(1) Compensation recognized by the Pension Plan is salary and incentive
compensation as reflected on the Summary Compensation Table.
(2) These amounts are straight life annuity amounts and would not be
subject to reduction because of Social Security Benefits.
(3) Messrs. Kelley, Lawrence, Brennan, Dellatorre, Johns, and McRae had
credited years of service of 35, 12, 19, 12, 17, and 13 years, respectively,
as of December 31, 1994.
</TABLE> III-6
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11 Executive Compensation (Continued)
(a) Summary Compensation Table
<TABLE>
The following table reflects the cash and non-cash compensation for services
in all capacities to the Company for those persons who served as the Company's
chief executive officer during the year ended December 31, 1994, and the other
four most highly compensated executive officers who were serving as executive
officers of the Company as of December 31, 1994 (the Named Officers):
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------- --------------------------------
Awards Payouts
(2) -------------- --------- (4)(5)(6)
Name (1) Other All
and Incentive Annual Restrict Securities (3) Other
Principal Base Compen- Compen- Stock Options/ LTIP Compen-
Position Year Salary sation sation Awards SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
------------- -------- ------- ------- ------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J.D. Kelley 1994 $252,529 $156,684 $25,536 - 12,000 $48,225 $90,373
President, CEO
F.D. Lawrence (7) 1994 $66,520 - $5,460 - 14,000 - $2,170
President, CEO 1993 236,224 95,579 2,311 - 11,000 49,532 7,021
1992 234,324 125,603 53,456 - 1,100 20,505 145,739
D.H. Brennan 1994 $141,124 $59,809 - - 5,000 - $4,980
Vice President - 1993 133,379 42,975 - - 5,000 - 5,572
Network 1992 131,265 55,645 - - - - 3,848
T.L. Dellatorre 1994 $126,534 $37,906 - - 3,500 - $4,688
Vice President - 1993 124,906 29,233 2,242 - 3,500 - 13,769
HumanResources 1992 115,375 29,064 9,794 - - - 30,792
J. M.Johns 1994 $127,612 $37,531 $410 _ 3,500 - $5,197
Vice President - 1993 121,632 31,072 400 - 3,500 - 5,503
Law and External 1992 120,577 35,858 625 - - - 4,145
Relations
R. D.McRae 1994 $140,514 $37,814 - - 3,500 - $7,939
Vice President - 1993 131,890 27,608 100 - 3,500 - 7,974
Business Development 1992 130,715 35,785 223 - - - 5,893
and Chief Financial
Officer
III-7
</TABLE>
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11. Executive Compensation (Continued)
Notes to Summary Compensation Table
-----------------------------------
(1)Includes all amounts earned for the respective years, even if deferred
under Sprint's Executive Deferred Compensation Plan.
(2)Amounts reimbursed during the respective years for the payment of taxes.
(3)Under Sprint's long-term incentive compensation plan, executives may
earn awards based on the value of performance shares assigned to them by
the Organization and Compensation Committee of Sprint's Board of Directors.
The value of performance shares is directly related to the fluctuations in
the market price of Sprint Common Stock over a period of time (not less
than two calendar years in length). Payments under the plan are made in
Sprint Common Stock with a portion of the awards paid in cash. Amounts
shown in this column reflect the cash and market value of Sprint Common
Stock, valued as of December 31 of the year of the award, paid for the
three-year performance period ended on December 31 of each such year.
(4)Consists of the following for 1994: (a) $6,471, $2,170, $4,234, $4,688,
$4,282 and $4,806 contributed on behalf of Messrs. Kelley, Lawrence,
Brennan, Dellatorre, Johns and McRae, respectively, as matching
contributions under the Sprint Retirement Savings Plan; (b) $9,529, $746,
$915 and $3,133 for Messrs. Kelley, Brennan, Johns and McRae, 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; and (c) $74,373 in relocation expenses for Mr.
Kelley.
(5)Consists of the following for 1993: (a) $5,970, $4,183, $4,633, $4,471
and $4,846 contributed on behalf of Messrs. Lawrence, Brennan, Dellatorre,
Johns and McRae, respectively, as matching contributions under the Sprint
Retirement Savings Plan; (b) $1,051, $1,389, $1,032, and $3,128 for
Messrs. Lawrence, Brennan, Johns and McRae, respectively, representing a
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; and (c) $9,136 in relocation expenses for Mr.
Dellatorre.
(6)Consists of the following for 1992: (a) $4,370, $3,050, $513, $3,341
and $3,521 contributed on behalf of Messrs. Lawrence, Brennan, Dellatorre,
Johns and McRae, respectively, as matching contributions under the Sprint
Retirement Savings Plan; (b) $872, $798, $804 and $2,372 for Messrs.
Lawrence, Brennan, Johns and McRae, respectively, representing a portion of
interest credits on deferred compensation accounts deemed by SEC rules to
be at above market rates; and (c) $140,497 and $30,279 in relocation
expenses for Mr. Lawrence and Mr. Dellatorre, respectively.
(7)Mr. Lawrence resigned from the Company on April 4, 1994.
III-8
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11. Executive Compensation (Continued)
Option Grants
<TABLE>
The following table summarizes options granted during 1994 under Sprint's stock
option plans to the Named Officers. The amounts shown as potential realizable
values on these options are based on arbitrarily assumed annualized rates of appreciation
in the price of Sprint Common Stock of five percent and ten percent set forth in SEC rules.
The Named Officers will realize no gain on these options without an increase in the price
of Common Stock which will benefit all shareholders proportionately. No stock appreciation
rights were granted during 1994.
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
Percent of
Number Total Potential Realizable
of Options/SARs Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees or Base Expira- Price Appreciation for
Options/SARs in Fiscal Price tion Option Term
Name granted (#)(2) Year ($/Sh) Date 5% (1) 10% (1)
(a) (b) (c) (d) (e) (f) (g)
----------------- --------------- ----------- ------- ------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
J. D. Kelley 12,000 0.44% 36.6875 2/11/04 276,871 701,645
F. D. Lawrence 14,000 0.51% 36.6875 2/11/04 323,016 818,586
D. H. Brennan 5,000 0.18% 36.6875 2/11/04 115,363 292,352
T.L. Dellatore 3,500 0.13% 36.6875 2/11/04 80,754 204,646
J.M. Johns 3,500 0.13% 36.6875 2/11/04 80,754 204,646
R.D. McRae 3,500 0.13% 36.6875 2/11/04 80,754 204,646
(1) The dollar amounts in these columns are the result of calculations at the 5% and 10% rates set by the
SEC and are not intended to forecast future appreciation of Sprint Common Stock.
(2) Twenty-five percent of the options become exercisable on February 11, 1995 with an additional 25%
exercisable on February 11 of each of the three successive years. Each option has a "reload" feature.
A reload option is granted when an optionee already owns in payment of the exercise price. The reload
option covers the number of shares surrendered in the option exercise (including shares withheld or
surrendered for tax withholding, if elected) and has an exercise price equal to the market price on the
date of exercise of the original option. The expiration date of the reload option is the same as the
expiration date of the option that was exercised. The new 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.
</TABLE>
III-9
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11. Executive Compensation (Continued)
Option Exercises and Fiscal Year-End Values
<TABLE>
The following table summarizes the net value realized on the exercise of options in 1994
and the value of the outstanding options at December 31, 1994, for the Named Officers.
<CAPTION>
Number of Securities
Shares Value Underlying Value of Unexercised
Name acquired on realized Unexercised Options/SARS in-the-Money
exercise (#) ($) (1) at 12/31/94 Options/SARs at 12/31/94 (2)
Exercisabe Unexercisable Exercisable Unexercisable
(#) (#) ($) ($)
(a) (b) (c) (d) (e)
-------------- ----------- ----------- -------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
J. D. Kelley - - 42,403 28,500 $ 9,969 $ 14,953
F. D. Lawrence 36,200 $ 228,694 - -
D. H. Brennan - - 18,500 12,500 96,578 6,797
T.L. Dellatore - - 8,625 8,375 30,422 4,078
J.M. Johns - - 14,625 8,375 92,047 4,078
R.D. McRae 6,000 152,063 15,625 8,375 94,828 4,078
(1) 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.
(2) The value of unexercised, in-the-money options is the difference between the options' exercise price and
the fair market value of Sprint Common Stock at 12/31/94 ($27.63).
</TABLE>
III-10
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 11. Executive Compensation (Continued)
<TABLE>
Long-Term Incentive Plan Awards
-------------------------------
The following table represents potential awards under Sprint's long-term incentive plan
which, subject to Sprint's right to amend the plan at any time prior to the Organization
and Compensation Committee's approval of of payouts, can be earned by the achievement of
certain financial objectives over the three year period ending December 31, 1996. The
payout is based on the achievement of these financial objectives and is adjusted (increased
or decreased) by the percent change in the market price of Sprint Common Stock as determined
by the change in the average of the high and low prices on January 1, 1994 and December 31,
1996. If the stock price increases over the three-year performance period, the payout is
adjusted by the percentage increase in stock price. Conversely, if the stock price decreases
over the three-year performance period, the payout is reduced by the percentage decrease in stock
price. Upon approval of the payouts by the Organization and Compensation Committee, each payout
will be paid as specified by the executive in restricted or unrestricted shares of Sprint Common
Stock, or deferred under the Executive Deferred Compensation Plan.
Estimated Future Payouts
under Non-Stock Price Based Plans (1)
-------------------------------------
Performance or
Other Period
Until Maturation Threshold Target Maximum
Name or Payout ($) ($) ($)
---- --------------- --------- ------- --------
<S> <C> <C> <C> <C>
J. D. Kelley 1/1/94-12/31/96 $17,044 $68,175 $109,966
D. H. Brennan 1/1/94-12/31/96 3,835 15,340 24,743
T. L. Dellatorre 1/1/94-12/31/96 3,358 13,430 21,663
J. M. Johns 1/1/94-12/31/96 3,358 13,430 21,663
R. D. McRae 1/1/94-12/31/96 3,358 13,430 21,663
(1) Awards are based on a percentage of the Named Officers' average base salary
midpoint over the three-year performance cycle which ends December 31, 1996.
In calculating the average base salary midpoint, the table assumes the base
salary midpoint for 1995 and 1996 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, 1996 will be
the same as it was on January 1, 1994.
III-11
Item 11. Executive Compensation (Continued)
Compensation of Directors
-------------------------
Directors who are not officers of the Company or an affiliated company were paid
an annual retainer fee of $4,400 in addition to $500 for each board meeting
attended. Members of the Executive Committee and the Audit Committee were paid
$500 for each meeting attended or conference call held.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------
</TABLE>
<TABLE>
(a) The voting securities of the Company at December 31, 1994 are held as
follows:
<CAPTION> Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
-------------- ------------------- ----------------- ---------
<S> <C> <C>
Common Stock Sprint Corporation 6,500,000 shares 100.00%
$2.50 par P.O. Box 11315 ========= ======
value Kansas City, MO 64112
Redeemable Hamac & Company 127,480 shares 64.41%
Preferred C/O Crestar Bank
Stock $10 par P. O. Box 26246
value Richmond, VA 23261
Redeemable New England Mutual Life 43,540 shares 22.00%
Preferred Insurance Company
Stock $10 par 501 Boylston Street
value Boston, MA 02117
Redeemable New York Life Insurance
Preferred Company 17,000 shares 8.59%
Stock $10 par 51 Madison Avenue
value New York, NY 10010
Redeemable ISACO 9,900 shares 5.00%
Preferred C/O IDS Trust
Stock $10 par P. O. Box 1281
value Minneapolis, MN 55440 -------------- ---------
197,920 shares 100.00%
======= ======
</TABLE>
III-12
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART III
Item 12. Security Ownership of Certain Beneficial Owners and Management
(Continued)
NOTE: There are no shares listed above with respect to which any
beneficial owner has the right to acquire beneficial ownership as
specified in Rule 13d-3(d)(1) under the Exchange Act.
(b) For the ownership at December 31, 1994 of each class of equity
securities of the Company and its parent, beneficially owned directly
or indirectly by all directors and Messrs. Kelley, Lawrence, Brennan,
Dellatorre, Johns, and McRae, and by all directors and executive
officers of the Company as a group see Items 10.(a) and 10.(b).
(c) There are no contractual arrangements known to the Company, including
any pledge of securities of the Company or its parent, the operation
of the terms of which may, at a subsequent date, result in a change in
the control of the Company.
Item 13. Certain Relationships and Related Transactions
--------
None.
III-13
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. The consolidated financial statements of the Company filed as a
part of this report are listed in the Index to Consolidated
Financial Statements on page II-7.
2. The consolidated financial statement schedule of the Company
filed as a part of this report is listed in the Index to
Consolidated Financial Statement Schedules on page IV-3.
3. The following exhibits are filed as part of this report:
EXHIBITS
(3)(a) Articles of Incorporation
(3)(b) Bylaws
(4)(a) The rights of the Company's equity security holders are
defined in Articles IV and VII of the Company's Articles of
Incorporation. See Exhibit 3(a) above.
(4)(b) Indenture of Mortgage dated as of the 2nd day of January 1941,
between the Company and Sun First National Bank of Orlando, as
Trustee, as supplemented by the First through Thirty-First
Supplemental Indentures (filed as Exhibits 4J through 4U to
Registration Statement No. 2-11471, Exhibits 4V through 4Y to
Registration Statement No. 2-12334, Exhibit 4Z to Registration
Statement No. 2-13108, Exhibits 4X through 4Z and 4-AA to
Registration Statement No. 2-22096, Exhibit 4-A-2 to Registration
Statement No. 2-38951, Exhibit 2-A-2 to Registration Statement
No. 2-42543, Exhibit 2-A-2 to Registration Statement No. 2-45708,
Exhibit 2-D-26 to Registration Statement No. 2-51785, Exhibits
4Q, 4V, 4W, 4X, and 4-CC to Registration Statement No. 2-69791,
Exhibit 4-DD to Registration Statement No. 33-5949, Exhibit
4-EE to Registration Statement No. 33-13964, and Exhibits 4-FF
and 4-GG to Registration Statement No. 33-51404, and incorporated
herein by reference).
(4)(c) Thirty-Second Supplemental Indenture dated as of December 1, 1992
between the Company and Barnett Banks Trust Company, N.A. (filed
as Exhibit 4 (i) to the Company's 1992 Annual Report on Form 10-K
and incorporated herein by reference).
(4)(d) Thirty-Third Supplemental Indenture dated as of May 1, 1993
between the Company and Barnett Banks Trust Company, N.A. (filed
as Exhibit 99 to the Company's Current Report on Form 8-K dated
May 12, 1993, and incorporated herein by reference).
IV-1
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(4)(e) Thirty-Fourth Supplemental Indenture dated as of July 1, 1993
between the Company and Barnett Banks Trust Company, N.A. (filed as
Exhibit 99 to the Company's Current Report on Form 8-K dated July 7,
1993, and incorporated herein by reference).
(4)(f) Thirty-Fifth Supplemental Indenture dated as of January 15, 1995
between the Company and The Bank of New York.
The Company will furnish to the Securities and Exchange Commission, upon
request, copies of the following instruments defining the rights of holders
of its long-term debt:
(a) Supplemental Mortgage and Security Agreement dated as of July 18, 1972
between Orange City Telephone Company, Incorporated, United States of
America and Rural Telephone Bank.
The obligations under these instruments were assumed by the Company in the
merger, effective December 31, 1982, with The Winter Park Telephone
Company, the former United Telephone Company of Florida and Orange City
Telephone Company, Incorporated. The total amount of securities authorized
under these or any other said instruments does not exceed 10% of the total
assets of the Company.
(b) The Registrant was not required to file a report on Form 8-K during
the last quarter of 1994.
IV-2
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART IV
Item 14(a) 2. Index to Consolidated Financial Statement Schedules
For each of the three years in the period ended
December 31, 1994:
Schedule VIII - Consolidated valuation and
qualifying accounts
All other schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
consolidated financial statements, including the notes thereto.
IV-3
UNITED TELEPHONE COMPANY OF FLORIDA
SCHEDULE VIII - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
Balance at Charged Accounts Charged Balance
Beginning to Off, Net of at End
<CAPTION> of Year Expense Collections of Year
--------- -------- --------------- ---------
Deducted from
assets:
Allowance for
uncollectible accounts:
<S> <C> <C> <C> <C>
Year Ended
December 31, 1994 $2,857 $4,127 $(3,666) $3,318
===== ===== ======= =====
Year Ended
December 31, 1993 $2,616 $3,580 $(3,339) $2,857
1993 ===== ===== ======= =====
Year Ended
December 31, 1992 $3,420 $3,206 $(4,010) $2,616
===== ===== ======= =====
</TABLE>
IV-4
UNITED TELEPHONE COMPANY OF FLORIDA
1994 FORM 10-K/PART IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto authorized.
UNITED TELEPHONE COMPANY OF FLORIDA
----------------------------------
(Registrant)
Date: March 30, 1995 By: /s/ R. D. McRae
------------- -----------------------------
R. D. McRae
Vice President - Business
Development and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ J. D. Kelley /s/ M. E. Ibanez
-------------------------- ----------------------------
J. D. Kelley M. E. Ibanez, Director
President, Director and Dated: February 28, 1995
Chief Executive Officer
Dated: February 28, 1995 /s/ R. D. Mathews, Jr.
------------------------------
R. D. Mathews Jr., Director
/s/ R. D. McRae Dated: February 28, 1995
----------------------------
R. D. McRae
Vice President - Business /s/ D. W. Peterson
and Chief Financial Officer -------------------------------
Dated: February 28, 1995 D. W. Peterson, Director
Dated: February 28, 1995
/s/ J. I. Lehman /s/ C. E. Rice
--------------------------- --------------------------------
J. I. Lehman, Controller C. E. Rice, Director
Principal Accounting Officer Dated: February 28, 1995
Dated: February 28, 1995
/s/ R. E. Bond /s/ M. T. Stith
----------------------------- --------------------------------
R. E. Bond, Director M. T. Stith, Director
Dated: February 28, 1995 Dated: February 28, 1995
/s/ M. A. Garcia, III /s/ R. M. Taylor
---------------------------- ---------------------------------
M. A. Garcia III, Director R. M. Taylor, Director
Dated: February 28, 1995 Dated: February 28, 1995
Thirty-Fifth Supplemental
Indenture of Mortgage
UNITED TELEPHONE COMPANY OF FLORIDA
TO
THE BANK OF NEW YORK,
Trustee
Dated as of January 15, 1995
THIS THIRTY-FIFTH SUPPLEMENTAL INDENTURE OF MORTGAGE, dated as of
January 15, 1995, by and between United Telephone Company of Florida, a
corporation duly organized and existing under the laws of the State of
Florida, with its principal place of business in Apopka, Orange County,
Florida (hereinafter sometimes referred to as the "Company"), and The Bank
of New York, a state banking corporation duly organized and existing under
the laws of the State of New York, having its principal corporate trust
office in New York, New York, as Trustee (hereinafter sometimes referred to
as the "Trustee").
Whereas, the Company executed and delivered to The First National Bank at
Orlando, as Original Trustee, an Indenture of Mortgage dated as of the 2nd
day of January, 1941 (hereinafter referred to as the "Original Indenture"),
to secure its First Mortgage Bonds, issuable in series; and
Whereas, the Company thereafter executed and delivered certain Supplemental
Indentures, First through Thirty-Fourth, inclusive, for the various
purposes of creating additional series of First Mortgage Bonds, conveying
and confirming unto the trustee certain additional property and amending
the Original Indenture in certain respects (the Original Indenture as
heretofore amended and supplemented and as amended and supplemented by this
Thirty-Fifth Supplemental Indenture is sometimes hereinafter referred to as
the "Indenture"); and
Whereas, Barnett Banks Trust Company, N.A., became successor trustee under
the Original Indenture, as supplemented, on November 24, 1982; and
Whereas, the Trustee became successor trustee under the Original Indenture,
as supplemented, on February 22, 1994; and
Whereas, pursuant to the Original Indenture, as supplemented, there were
outstanding as of December 31, 1994, First Mortgage Bonds of Series and
principal amounts as follows:
4 5/8% Bonds, Series R . . . . . . . . . . . . . . . . . . .$2,500,000
9.25% Bonds, Series CC . . . . . . . . . . . . . . . . . . 115,000,000
7.25% Bonds, Series DD . . . . . . . . . . . . . . . . . . 50,000,000
6.25% Bonds, Series EE . . . . . . . . . . . . . . . . . . .70,000,000
6.875% Bonds, Series FF . . . . . . . . . . . . . . . . . . 60,000,000
7.125% Bonds, Series GG . . . . . . . . . . . . . . . . . .. 75,000,000
Total . . . . . . . . . . . . . . . . . . . . . . . . .. $372,500,000
which constitute the only bonds outstanding under the Original Indenture as
supplemented by the First through the Thirty-Fourth Supplemental
Indentures, inclusive; and
Whereas, the Company has determined by due corporate action to provide for
the issuance of additional First Mortgage Bonds in the aggregate principal
amount of Seventy Million Dollars ($70,000,000) to be known as the
Company's "First Mortgage Bonds, Series HH", and to make provision for the
execution, authentication and delivery of the entire issue pursuant to the
terms of the Indenture and to be in form and tenor substantially as
hereinafter stated; and
Whereas, all things necessary to make the said First Mortgage Bonds,
Series HH, when authenticated by the Trustee and issued as provided in the
Indenture, the valid, binding and legal obligations of the Company, and to
constitute the Indenture a valid First Mortgage and Deed of Trust to secure
the payment of the principal of and interest on all bonds under all series
issued thereunder have been done and performed, and the creation, execution
and delivery of this Thirty-Fifth Supplemental Indenture and the execution
and issuance of said First Mortgage Bonds, Series HH, subject to the terms
of the Indenture, have in all respects been duly authorized;
Now, Therefore, this Indenture Witnesseth:
That the Company, without in any way limiting the grant contained in the
Indenture, in consideration of the premises and One Dollar, lawful money of
the United States of America to it duly paid by the Trustee, the receipt
whereof is hereby acknowledged and for other good and valuable
considerations, has granted, bargained, sold, released, conveyed, aliened,
assigned, confirmed, transferred, mortgaged, warranted, pledged and set
over, and does by these presents grant, bargain, sell, release, convey,
alien, assign, confirm, transfer, mortgage, warrant, pledge and set over
unto The Bank of New York and its successor, or successors in trust, and to
them and their assigns forever, all and singular the premises, property,
rights, franchises and physical property now owned or hereafter acquired by
the Company (real, personal and mixed) and wheresoever situated, including
all additions acquired or constructed by the Company since the execution
and delivery of the Original Indenture and including all properties (real,
personal and mixed) hereafter acquired by the Company and wheresoever
situated, other than property of the nature of that excluded by the
granting clauses of said Original Indenture.
To Have and to Hold all premises, rights, franchises, physical property
additions and property (real, personal and mixed) of the Company, including
all those properties now owned and hereafter acquired by the Company and
wheresoever situated, transferred, assigned, mortgaged or pledged by the
Company as aforesaid, or intended so to be, unto the Trustee and its
successors in such trust and to their assigns forever, it being agreed
hereby that all such premises, rights, franchises, physical property
additions and property (real, personal and mixed) of the Company shall be
and are as fully granted and conveyed hereby and as fully embraced within
the lien of the Original Indenture as if such premises, rights, franchises,
physical property additions, and property (real, personal and mixed) of the
Company were specifically described herein and conveyed hereby.
In Trust, Nevertheless, for the purposes, with the provisions and subject
to the agreements, conditions and covenants set forth and expressed in the
Indenture.
ARTICLE I
Series HH Bonds
Section 1. There shall be and are hereby created "First Mortgage Bonds,
Series HH" of the principal amount of Seventy Million Dollars
($70,000,000), hereinafter sometimes referred to as "Series HH bonds" or
"bonds of Series HH". Series HH bonds shall be fully registered bonds
without coupons authenticated by the certificate of authentication of the
Trustee. Each bond of Series HH shall be dated as of the interest payment
date next preceding the date of its authentication upon or as of which
interest payment date payment of interest was last made upon bonds of
Series HH (unless (a) issued on an interest payment date to which interest
was paid upon bonds of Series HH, in which event it shall be dated as of
the date of issue, or (b) issued prior to the occurrence of the first
interest payment date on which interest is payable on bonds of Series HH,
in which event it shall be dated January 26, 1995, or (c) issued between
the record date (as hereinbelow defined) for any interest payment date and
such interest payment date, in which event it shall be dated such interest
payment date) and shall bear interest at the annual rate of interest set
forth hereinafter in the form of Series HH bonds until the payment of the
principal thereof, such interest to be payable semi-annually on the
fifteenth day of January and July of each year, the first interest payment
date being July 15, 1995. All Series HH bonds shall mature on January 15,
2025. The bonds of Series HH may be issued in the denomination of $1000 or
any integral multiples thereof.
The person in whose name any Series HH bond is registered at the close of
business on any record date (as hereinbelow defined) with respect to any
interest payment date shall be entitled to receive the interest payable
thereon on such interest payment date notwithstanding the cancellation of
such Series HH bond upon any transfer or exchange thereof subsequent to
such record date and prior to such interest payment date, unless the
Company shall default in the payment of interest due on such interest
payment date on any Series HH bond, in which case such defaulted interest
shall be paid to the person in whose name such Series HH bond (or any
Series HH bond or bonds issued upon transfer or exchange thereof) is
registered at the close of business on the record date for the payment of
such defaulted interest. The term "record date" as used in this Section
with respect to any interest payment date shall mean the January 1 or
July 1 next preceding such interest payment date, or, if such January 1 or
July 1 is not a business day, the business day next preceding such
January 1 or July 1, and such term, as used in this Section, with respect
to the payment of any defaulted interest shall mean the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted
interest or, if such fifteenth day is not a business day, the business day
next preceding such fifteenth day.
In any case where any interest payment date, or any date on which any
payment of principal is due, whether at stated maturity, upon redemption or
otherwise, of any Series HH bond shall not be a business day, then
(notwithstanding any other provision of the Indenture or of the Series HH
bonds) payment of interest or principal need not be made on such date, but
may be made on the next succeeding business day with the same force and
effect as if made on the interest payment date or date on which the payment
of principal was due, provided that no interest shall accrue for the period
from and after such interest payment date or date on which such payment of
principal was due, as the case may be.
Such bonds and the certificate of authentication of the Trustee shall be
substantially in the following forms, respectively (with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by the Indenture), to wit:
[Form of Series HH Bond]
UNITED TELEPHONE COMPANY OF FLORIDA
8 3/8% First Mortgage Bond, Series HH
due January 15, 2025
No. ________________ $_________________
United Telephone Company of Florida, a corporation of the State of Florida
(hereinafter called the "Company"), for value received, hereby promises to
pay to _________ or registered assigns, on January 15, 2025 the principal
sum of _________ and to pay interest thereon semi-annually on January 15 and
July 15 of each year, commencing July 15, 1995, at the rate of 8 3/8% per
annum, until said principal sum is paid. The principal of and interest on
this bond shall be payable at the office of The Bank of New York, New York,
New York, or its successors in trust, in coin or currency of the United
States of America which, at the time of payment, is legal tender for the
payment of public or private debts due in the United States of America.
Subject to certain exceptions provided in the Indenture hereafter referred
to, the interest so payable on any January 15 or July 15 will be paid to
the person in whose name this bond is registered at the close of business
on the January 1 or July 1 next preceding such January 15 or July 15, or
if such January 1 or July 1 is not a business day, the business day next
preceding such January 1 or July 1.
Payment of the principal of and interest on this Bond due at maturity will
be made in immediately available funds to The Depository Trust Company or
its nominee, provided that this Bond is presented to the Trustee in time
for the Trustee to make such payment in accordance with its normal
procedures. Payment of interest (other than interest payable at maturity)
on this Bond will be made by transfer of immediately available funds to The
Depository Trust Company or its nominee.
The provisions of this bond are continued on the reverse hereof and such
continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
In Witness Whereof, United Telephone Company of Florida has caused this
bond to be executed in its corporate name with the signature of its
President or one of its Vice Presidents and its corporate seal to be
hereunto affixed or a facsimile thereof to be imprinted hereon and attested
by the signature of its Secretary or one of its Assistant Secretaries.
Dated ___________________________
United Telephone Company of Florida
By:__________________________________
President
Attest:
_____________________________
Secretary
[Form of Reverse of Series HH Bond]
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company, limited to the aggregate principal amount as is set out in the
Original Indenture, the indentures supplemental thereto, and the
Thirty-Fifth Supplemental Indenture dated as of January 15, 1995, and known
as First Mortgage Bonds, Series HH, all issued and to be issued under and
pursuant to and equally secured by a duly recorded Indenture of Mortgage
(herein referred to as the Original Indenture), as amended and supplemented
by thirty-five supplemental indentures, each duly executed and delivered by
the Company to The Bank of New York, New York, New York, as Trustee, or to
its predecessor trustee, upon substantially all of the property and
franchises of the Company now owned or hereafter acquired, to which
Original Indenture, as supplemented, and all further supplemental
indentures thereto reference is hereby made for a description of the
property transferred and mortgaged thereunder, the nature and extent of the
security and the rights of the holders of said bonds, and of the Trustee
and of the Company in respect of such security. Subsequent series of bonds
may be issued on such conditions and may vary as to date, date of maturity,
rate of interest and in other ways as in such Indentures provided or
permitted.
No reference herein to the Original Indenture, as supplemented, and no
provision of this bond or of the Original Indenture, as supplemented, shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this bond at the
respective times, at the rate and in the currency herein prescribed.
In case an event of default as defined in said Original Indenture occurs,
the principal of this bond may become or may be declared due and payable
before the stated maturity hereof, as specified in said Original Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that
purpose at the office of the Trustee under the Indenture, upon surrender
hereof at said office for cancellation and upon presentation of a written
instrument of transfer duly executed, and thereupon the Company shall issue
in the name of the transferee or transferees, and the Trustee shall
authenticate and deliver, a new registered bond or bonds, of like form and
in an authorized denomination or in authorized denominations and of the
same series, for the same aggregate principal amount; bonds of this series
upon surrender thereof at said office may be exchanged for the same
aggregate principal amount of bonds of this series of another authorized
denomination or other authorized denominations; all upon payment of the
charges, if any, and subject to the terms and conditions specified in the
Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for purposes of receiving payment of the
principal hereof and interest due hereon subject to the record date
provision of the first paragraph hereof, and for all other purposes, and
neither the Company nor the Trustee nor any paying agent or agency shall be
affected by any notice to the contrary whether this bond or the interest
thereon shall be overdue or not.
No recourse shall be had for the payment of the principal of or the
interest on this bond or of any claim based hereon or in respect hereof or
of said Original Indenture, as supplemented, against any incorporator,
subscriber, stockholder, officer or director of the Company, past, present
or future, whether directly or through a receiver in bankruptcy, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance of this bond, expressly released.
Form of Trustee's Certificate of Authentication
for Bonds of Series HH
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the First Mortgage Bonds, Series HH, provided for and
described in the Thirty-Fifth Supplemental Indenture of Mortgage within
mentioned.
The Bank of New York
As Trustee
By___________________________
Authorized Signature
Section 2. Series HH bonds redeemed pursuant to any of the provisions of
Article Six of the Indenture (including redemptions pursuant to Section
6.11 with the proceeds from the sale of property pursuant to Section 9.04)
may be redeemed at any time at a redemption price equal to the principal
amount thereof together with interest accrued and unpaid to the date fixed
for redemption. The Trustee shall select bonds to be redeemed pursuant to
any of the provisions of Article Six of the Indenture, in such manner as,
in its discretion, it shall deem appropriate and equitable and not designed
to result in disproportionate redemption of Series HH bonds in relationship
to other series of bonds.
Section 3. In case of the redemption of any of the Series HH bonds
pursuant to any of the provisions of Article Six of the Indenture
(including redemptions pursuant to Section 6.11 with the proceeds from the
sale of property pursuant to Section 9.04), the Trustee shall give notice
of such redemption to the holders of the Series HH bonds to be redeemed as
hereinafter in this Section provided.
Notice of redemption shall be given to the holders of Series HH bonds to be
redeemed as a whole or in part by mailing by registered mail, postage
prepaid, a notice of such redemption not less than thirty nor more than
sixty days prior to the date fixed for redemption to their last addresses
as they shall appear upon the bond register, but failure to give such
notice by mailing in the manner herein provided to the holder of any
Series HH bond designated for redemption as a whole or in part, or any
defect therein, shall not affect the validity of the proceedings for the
redemption of any other Series HH bonds.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives the notice.
Each such notice of redemption shall specify the date fixed for redemption
and the redemption price at which Series HH bonds are to be redeemed, and
shall state that payment of the redemption price of the Series HH bonds to
be redeemed will be made at the office of the Trustee upon presentation and
surrender of such Series HH bonds, that interest accrued to the date fixed
for redemption will be paid as specified in said notice, and that on and
after said date interest thereon will cease to accrue. If less than all the
Series HH bonds are to be redeemed, the notice of redemption shall specify
the Series HH bonds to be redeemed as a whole or in part. In case any
Series HH bond is to be redeemed in part only, the notice which relates to
such Series HH bond shall state the portion of the principal amount thereof
to be redeemed (which shall be $1,000 or any integral multiple thereof),
and shall state that on and after the redemption date, upon surrender of
such Series HH bond, the holder will receive the redemption price in
respect of the principal amount thereof called for redemption and, without
charge, a new bond or bonds of that series and of authorized denominations
for the principal amount thereof remaining unredeemed.
Section 4. If the giving of notice of redemption shall have been completed
as above provided, the Series HH bonds or portions of such bonds specified
in such notice shall become due and payable on the date and at the place
stated in such notice at the redemption price, together with interest
accrued to the date fixed for redemption, and on and after such date fixed
for redemption interest on the Series HH bonds or portions of such bonds so
called for redemption shall cease to accrue. On presentation and surrender
of such Series HH bonds at said place of payment in said notice specified,
the said Series HH bonds shall be paid and redeemed at the redemption
price, together with interest accrued to the date fixed for redemption.
Section 5. Bonds of Series HH, upon surrender thereof at the main office
of the Trustee, may be exchanged for the same aggregate principal amount of
bonds of that series of other authorized denominations. Within a reasonable
time after the surrender of bonds of Series HH accompanied by a request for
such an exchange, the Company shall execute and the Trustee shall
authenticate and deliver all bonds required in connection therewith.
Upon surrender for registration of transfer of any bonds, the Company shall
execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new bond or bonds of the same series for a like
aggregate principal amount.
All bonds presented or surrendered for exchange, registration of transfer,
redemption, or payment shall, if so required by the Company or the Trustee,
be accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Trustee, duly executed by the registered
holder or by his attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of bonds, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
relation thereto.
The Company shall not be required (a) to issue, exchange or register the
transfer of any bonds during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of less
than all the outstanding bonds and ending at the close of business on the
day of such mailing, or (b) to register the transfer of or exchange any
bonds or portions thereof called or selected for redemption.
Section 6. Upon or at any time and from time to time after the execution
and delivery of this Thirty-Fifth Supplemental Indenture, the Company may
execute and deliver to the Trustee and, subject to Section 4.01 of the
Indenture, the Trustee shall authenticate and deliver to or upon the order
of the Company Seventy Million Dollars ($70,000,000) in aggregate principal
amount of Series HH bonds.
ARTICLE II
Defeasance
Section 1. Applicability of Article; Company's Option to Effect
Defeasance.
The Company may at its option by Board Resolution, at any time, with
respect to the Series HH bonds, elect to have either Section 2 or Section 3
of this Article II be applied to the outstanding Series HH bonds
(hereinafter in this Article II, the "Defeased Bonds"), upon compliance
with the conditions set forth in this Article II.
Section 2. Defeasance and Discharge.
Upon the Company's exercise of the option applicable to this Section, the
Company shall be deemed to have been discharged from its obligations with
respect to the outstanding Defeased Bonds on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this purpose,
such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Defeased
Bonds and to have satisfied all its other obligations under the Defeased
Bonds and the Indenture insofar as the Defeased Bonds are concerned (and
the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights
of holders of outstanding Defeased Bonds to receive, solely from the trust
fund described in Section 4 of this Article II and as more fully set forth
in such Section, payments in respect of the principal of and interest on
the Defeased Bonds when such payments are due, (B) the Company's
obligations with respect to such Defeased Bonds under Sections 1.10, 1.12,
1.13, 12.02 and 15.01 of the Indenture, (C) the rights, powers, trusts,
duties, and immunities of the Trustee under the Indenture and (D) this
Article II. Subject to compliance with this Article II, the Company may
exercise its option under this Section 2 notwithstanding the prior exercise
of its option under Section 3 of this Article II with respect to the
Defeased Bonds.
Section 3. Covenant Defeasance.
Upon the Company's exercise of the option applicable to this Section, the
Defeased Bonds shall no longer be entitled to the benefits of the lien of
the Indenture, which shall be deemed to be released for all purposes of the
Indenture with respect to the Defeased Bonds, and the Defeased Bonds shall
not be deemed to be outstanding for purposes of Section 4.01 of the
Indenture, on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance").
Section 4. Conditions to Defeasance.
The following shall be the conditions to application of either Section 2 or
Section 3 of this Article II to the outstanding Series HH bonds:
(1) the Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of
Section 12.07 of the Indenture, who shall agree to comply with the
provisions of this Article II applicable to it), as trust funds in trust
for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the
Defeased Bonds, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
the principal of and each installment of principal of and interest on the
outstanding Defeased Bonds on the stated maturity of such principal or
installment of principal or interest. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the payment of which its full faith and credit is
pledged or (y) obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian
with respect to any such U.S. Government Obligation or a specific payment
of principal of or interest on any such U.S. Government Obligation held by
such custodian for the account of the holder of such depository receipt,
provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository
receipt.
(2) No event of default or event which with notice or lapse of time or
both would become an event of default with respect to the Defeased Bonds
shall have occurred and be continuing on the date of such deposit or,
insofar as Section 8.01(e) is concerned, at any time during the period
ending on the 91st day after the date of such deposit or, if longer, ending
on the day following the expiration of the longest preference period
applicable to the Company in respect of such deposit (it being understood
that this condition shall not be deemed satisfied until the expiration of
such period).
(3) Such defeasance or covenant defeasance shall not cause the Trustee for
the Defeased Bonds to have a conflicting interest as defined in
Section 12.14 of the Indenture and for purposes of the Trust Indenture Act
of 1939, as amended, with respect to any securities of the Company.
(4) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, the Indenture or any other
agreement or instrument to which the Company is a party or by which it is
bound.
(5) Such defeasance or covenant defeasance shall not cause any Defeased
Bonds then listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.
(6) In the case of an election under Section 2 of this Article II, the
Company shall have delivered to the Trustee an opinion of counsel stating
that (x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) subsequent to January 15, 1995,
there has been a change in the applicable Federal income tax law in either
case to the effect that, and based thereon such opinion shall confirm that,
the holders of the outstanding Defeased Bonds will not recognize income,
gain or loss for Federal income tax purposes as a result of such defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred.
(7) In the case of an election under Section 3 of this Article II, the
Company shall have delivered to the Trustee an opinion of counsel to the
effect that the holders of the outstanding Defeased Bonds will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
Section 5. Deposited Money and U.S. Government Obligations to be Held in
Trust; Miscellaneous.
All money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee_collectively, for
purposes of this Section 5, the "Trustee") pursuant to Section 4 of this
Article II in respect of the outstanding Defeased Bonds shall be held in
trust and applied by the Trustee, in accordance with the provisions of the
Defeased Bonds and the Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the holders of the Defeased Bonds,
of all sums due and to become due thereon in respect of principal and
interest, but such money need not be segregated from other funds except to
the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 4 of this Article II or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of the outstanding
Defeased Bonds.
Anything in this Article II to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the written
request of the Company any money or U.S. Government Obligations held by it
as provided in Section 4 of this Article II which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of
the amount thereof which would then be required to be deposited to effect
an equivalent defeasance or covenant defeasance.
Section 6. Notice of Defeasance.
Notice of defeasance or covenant defeasance shall be given by registered
mail, postage prepaid, mailed not more than 30 days following the date of
deposit of money or U.S. Government Obligations pursuant to Section 4 of
this Article II, to the holders of Defeased Bonds at their last addresses
as they appear on the bond register not less than 10 days prior to such
date of mailing. Notice of defeasance or covenant defeasance shall be given
by the Company or, at the Company's request, by the Trustee in the name and
at the expense of the Company.
ARTICLE III
Additional Provisions
Section 1. The Company agrees that it will at all times maintain, preserve
and keep the property subject to the lien of the Indenture, with the
appurtenances and every part and parcel thereof, in good repair, working
order and condition and equipped with suitable equipment.
Section 2. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree that the
provisions of Sections 6.13, 4.01(d)(7) and 6.08 of the Indenture, insofar
as they relate to the amount of funds required to be expended by the
Company for maintenance and/or provided for depreciation and/or expended
for permanent additions against which no bonds have been, or will be,
issued, shall cease to be effective on the earlier date on which either
(a) no Bonds of Series R shall be outstanding or (b) amendments to such
Sections 6.13, 4.01(d)(7) and 6.08 of the Original Indenture, as
supplemented, shall have become effective upon the consent of the holders
of the Bonds of Series R.
Section 3. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Subsection 4.01(e) and the parenthetical sentence of Section 15.04 of
the Indenture by deleting the word "independent" where it appears.
Section 4. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Section 6.09 of the Indenture by adding the following phrase at the end
of the third sentence thereof: "provided that, if any such payment shall be
in an amount less than one-tenth of one percent (0.1%) of the book value,
determined in accordance with generally accepted accounting principles, of
the mortgaged property of the Company at that time, the payment shall be
made to the Company and shall not be required to be made to the Trustee."
Section 5. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Section 6.10 of the Indenture by deleting the first sentence thereof and
by deleting the words "the insurance proceeds payable in respect of which
exceed the sum of Five Thousand Dollars ($5,000)" in the second sentence
thereof.
Section 6. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Section 6.11 of the Indenture by: (i) adding the following phrase at the
end of the first sentence: "provided that, if such proceeds amount to less
than one-tenth of one percent (0.1%) of the book value, determined in
accordance with generally accepted accounting principles, of the mortgaged
property of the Company at that time, the Company shall not be required to
deposit such proceeds with the Trustee"; (ii) inserting the following
phrase after the word "purchase" in clause (b) of the fourth sentence:
"(except as provided in the first sentence of this Section 6.11)";
(iii) deleting the first sentence in the second paragraph thereof and
adding in lieu thereof the following:
Any amount received by the Trustee as an award in such taking shall be paid
over by the Trustee to the Company upon the appropriation of net
expenditures for property additions in an amount equal to one hundred
percent (100%) of such award. Such appropriation shall be evidenced by
filing with the Trustee (A) an officers' certificate dated as of a date
within 90 days prior to the date of such appropriation, setting forth the
information called for by paragraphs (1), (2), (3), (4) and (5) of
Subsection 4.01(d) of the Indenture and stating the amount of net
expenditures for property additions to be so appropriated, (B) an
engineer's certificate in the form required by Subsection 4.01(e) of the
Indenture if such an engineer's certificate would be required by such
Subsection 4.01(e), (C) an opinion of counsel in the form called for by
Subsection 4.01(f) of the Indenture and (D) such further documents required
by the provisions of Article 15 of the Indenture.
and (iv) deleting the first sentence in the third paragraph thereof.
Section 7. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Section 9.04 of the Indenture by (i) adding the following phrase at the
end of the second sentence of Subsection 9.04(b): "and provided, further,
however, that if the proceeds from the sale of any such property amount to
less than one-tenth of one percent (0.1%) of the book value, determined in
accordance with generally accepted accounting principles, of the mortgaged
property of the Company at that time, the Company shall not be required to
deposit such proceeds with the Trustee"; (ii) deleting the words "and a
sworn statement of an independent engineer" and the words "and such
engineer" in Subsection 9.04(d); and (iii) deleting the words "in addition
to any certificate required by Subsection (d) of this Section" in the first
sentence of Subsection 9.04(e). The Company, and the holders of the
Series HH bonds by their acceptance and holding thereof, hereby further
consent and agree that, at such time as the foregoing amendments to
Section 9.04 of the Indenture become effective, the release of property
from the lien of the Indenture upon its sale or exchange shall be governed
by said Section 9.04, notwithstanding any provisions to the contrary
(relating to specific parcels of real estate) contained in the Third and
the Fifth Supplemental Indentures.
Section 8. The amendments to the Indenture set forth in Sections 3
through 7 of this Article III shall be effective on the earlier date on
which either (a) no Bonds of Series R shall be outstanding or (b) such
amendment shall have become effective upon the consent of the holders of
the Bonds of Series R.
Section 9. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree to the amendment
of Section 13.09 of the Indenture by deleting the phrase "seventy-five
percent (75%)" in each place where it appears and inserting in lieu thereof
the phrase "sixty-six and two-thirds percent (66 2/3%)". Such amendment
shall be effective on the earlier date on which either (a) no Bonds of
Series R shall be outstanding or (b) such amendment shall have become
effective upon the consent of the holders of the Bonds of Series R;
provided, however, that such amendment shall be effective immediately with
respect to any modification or waiver of any right which shall have been
specifically provided in respect of the Series HH bonds.
Section 10. The Company, and the holders of the Series HH bonds by their
acceptance and holding thereof, hereby consent and agree that the Series HH
bonds may be executed by the facsimile signature of the Company's president
or one of its vice-presidents under its corporate seal, attested by the
facsimile signature of the Company's secretary or one of its assistant
secretaries.
Section 11. This Thirty-Fifth Supplemental Indenture of Mortgage may be
simultaneously executed in several counterparts, each of which shall be an
original, and all of which shall constitute but one and the same
instrument. The Indenture shall constitute one agreement between the
parties.
Section 12. The aggregate principal amount of Series HH bonds authorized
by this Indenture is limited to Seventy Million Dollars ($70,000,000), and
the Company shall not execute and the Trustee shall not authenticate or
deliver Series HH bonds in excess of such aggregate principal amount,
provided that nothing contained in this Section or elsewhere in this
Indenture, or in the Series HH bonds, is intended to or shall limit
execution by the Company or authentication or delivery by the Trustee of
Series HH bonds under the circumstances contemplated by Sections 1.12
and 1.13 of the Original Indenture.
Section 13. The Original Indenture as heretofore amended and supplemented
and as amended and supplemented by this Thirty-Fifth Supplemental Indenture
shall be, remain and continue in full force and effect; and the Original
Indenture as so amended and supplemented is in all respects hereby ratified
and confirmed.
In Witness Whereof, United Telephone Company of Florida, party of the first
part, has caused these presents to be signed in its name and behalf by its
President or one of its Vice Presidents, and its corporate seal to be
affixed, and said seal to be attested by the signature of its Secretary or
an Assistant Secretary, and the due execution of these presents to be
proved; The Bank of New York, party of the second part, has caused these
presents to be signed in its name and behalf by its Vice President, and its
corporate seal to be hereunto affixed, and said seal to be attested by the
signature of an Assistant Treasurer, and the due execution of these
presents to be proved; and all of which shall be effective as of the 15th
day of January, 1995.
United Telephone Company
of Florida
By /s/ RICHARD D. MCRAE
--------------------------
Richard D. McRae, Vice President
Attest:
/s/ Jerry M. Johns
------------------
Jerry M. Johns,
Secretary
Signed, sealed, executed, acknowledged and delivered by United Telephone
Company of Florida, in the presence of:
[Corporate Seal]
/s/ SUSAN V. STUCKER
--------------------
Susan V. Stucker
/s/ MONIKA BAILEY
-----------------
Monika Bailey
The Bank of New York
By /s/ Michael J. Pellino
----------------------
Michael J. Pellino, Vice President
Attest:
/s/ Garrett P. Smith
---------------------
Garrett P. Smith,
Assistant Treasurer
Signed, sealed, executed, acknowledged and delivered by The Bank of New
York, in the presence of:
[Corporate Seal]
/s/ Susan V. Stucker
--------------------
Susan V. Stucker
/s/ Monika Bailey
-----------------
Monika Bailey
State of Florida
ss.:
County of Orange
Before me, the undersigned, a notary public in and for the State and County
aforesaid, an officer duly authorized to take acknowledgments of deeds and
other instruments, personally appeared Richard D. McRae, Vice President of
United Telephone Company of Florida, a corporation, party of the first part
in and to the above written instrument, and also personally appeared before
me Jerry M. Johns, Secretary of said corporation; and said persons being
severally well known to me or produced their driver's license as
identification and who, as such Vice President and as such Secretary,
executed the above written instrument on behalf of said corporation; and
he, the Vice President, acknowledged that as such Vice President he
subscribed the said corporate name to said instrument on behalf and by
authority of said corporation, and he, the Secretary, acknowledged that he
affixed the seal of said corporation to said instrument and attested the
same by subscribing his name as Secretary of said corporation, by authority
and on behalf of said corporation, and each of the two persons above named
acknowledged that they, as such Vice President and Secretary, delivered
said instrument by authority and on behalf of said corporation, and that
all such acts were done freely and voluntarily and for the uses and
purposes in said instrument set forth, and that such instrument is the free
act and deed of said corporation; and each of said persons further
acknowledged and declared that he knows the seal of said corporation, and
that the seal affixed to said instrument is the corporate seal of the
corporation aforesaid.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal this 13th day of January, 1995, at Apopka in the State and County
aforesaid.
/s/ Pamela Campbell
-------------------
Pamela Campbell
[Notarial Seal] PAMELA CAMPBELL
NOTARY PUBLIC STATE OF FLORIDA
Notary Public - State of Florida
My Commission Expires
December 28, 1995
CC159485
State of Florida
ss.:
County of Orange
Before me, the undersigned, a notary public in and for the State and County
aforesaid, an officer duly authorized to take acknowledgments of deeds and
other instruments, personally appeared Michael J. Pellino, Vice President
of The Bank of New York, a New York state banking corporation, party of the
second part in and to the above written instrument, and also appeared
before me Garrett P. Smith, Assistant Treasurer of said corporation; and
said persons being severally well known to me or produced their driver's
license as identification and who, as such Vice President and as such
Assistant Treasurer, executed the above written instrument on behalf of
said corporation; and the said Vice President acknowledged that as such
Vice President he subscribed the name of said corporation to said
instrument on behalf and by authority of said corporation, and the said
Assistant Treasurer acknowledged that he affixed the seal of said
corporation to said instrument and attested the same by authority and on
behalf of said corporation, and each of the two persons above named
acknowledged that they, as such Vice President and as such Assistant
Treasurer, delivered said instrument by authority and on behalf of said
corporation, and that all such acts were done freely and voluntarily and
for the uses and purposes in said instrument set forth and that such
instrument is the free act and deed of said corporation; and each of said
persons further acknowledged and declared that said person knows the
corporate seal of said corporation, and that the seal affixed to said
instrument is the corporate seal of the corporation aforesaid.
In Witness Whereof, I have hereunto set my hand and affixed my official
seal this 13th day of January, 1995, at Apopka, in the State and County
aforesaid.
Pamela Campbell
[Notarial Seal]
PAMELA CAMPBELL
NOTARY PUBLIC STATE OF FLORIDA
Notary Public - State of Florida
My Commission Expires
December 28, 1995
CC159485
To qualify for the excise tax treatment provided for in Section 201.08(4),
Florida Statutes (1993), the Company states that the Original Indenture and
First through Thirty-Fourth Supplemental Indentures were recorded in the
counties and at the book and page numbers set forth below:
Charlotte County: O.R. 865, p. 1354; O.R. 875, p. 961; O.R. 920, p. 2145;
O.R. 1061, p. 1865; O.R. 1251, p. 0954; O.R. 1277, p. 926; O.R. 1286,
p.1619. Citrus County: M.B. 16 p. 224; M.B. 16 p. 323; M.B. 17 p. 262; M.B.
18 p. 80; M.B. 18 p. 87; M.B. 18 p. 227; M.B. 18 p. 546; M.B. 22 p. 371;
O.R. 3 p. 432; O.R. 12 p. 281; O.R. 16 p. 495; O.R. 21 p. 183; O.R. 33
p. 324; O.R. 46 p. 1; O.R. 60 p. 232; O.R. 79 p. 545; O.R. 97 p. 500; O.R.
113 p. 542; O.R. 117 p. 65; O.R. 161 p. 193; O.R. 177 p. 94; O.R. 278
p. 28; O.R. 300 p. 799; O.R. 321 p. 759; O.R. 341 p. 707; O.R. 381 p. 627;
O.R. 597 p. 1055; O.R. 707, p. 1843; O.R. 740, p. 0288; O.R. 829, p. 1839;
O.R. 0963, p. 0250; O.R. 982, p. 239; O.R. 989, p. 942. Collier County:
O.R. 1195, p. 163; O.R. 1208, p. 167; O.R. 1269, p. 1422; O.R. 1471,
p. 2037; O.R. 1778, p. 001297; O.R. 1825, p. 1682; O.R. 1842,
pp. 1107-1139. DeSoto County: O.R. 224, p. 490; O.R. 226, p. 647; O.R. 236,
p. 1109; O.R. 263, p. 369; O.R. 307, p. 567; O.R. 313, p. 1062; O.R. 315,
p. 1120. Glades County: O.R. 104, p. 247; O.R. 105, p. 893; O.R. 109,
p. 1024; O.R. 120, p. 862; O.R. 138, p. 0340; O.R. 140, p. 852; O.R. 141,
pp.772-804. Hardee County: O.R. 323, p. 463; O.R. 326, p. 131; O.R. 338,
p. 831; O.R. 378, p. 245; O.R. 438, p. 248; O.R. 445, p. 747; O.R. 448,
p. 548. Hendry County: O.R. 374, p. 889; O.R. 378, p. 976; O.R. 395,
p. 977; O.R. 439, p. 579; O.R. 0490, p. 1884; O.R. 495, p. 1519; O.R. 497,
pp. 1492-1524. Hernando County: M.B. 79 p. 418; M.B. 79 p. 468; O.R. 2
p. 97; O.R. 3 p. 59; O.R. 9 p. 456; O.R. 16 p. 14; O.R. 25 p. 283; O.R. 32
p. 370; O.R. 43 p. 353; O.R. 57 p. 183; O.R. 69 p. 255; O.R. 78 p. 272;
O.R. 80 p. 333; O.R. 103 p. 321; O.R. 111 p. 57; O.R. 253 p. 1; O.R. 284
p. 100; O.R. 301 p. 881; O.R. 316 p. 65; O.R. 346 p. 892; O.R. 503 p. 1967;
O.R. 617, p. 0989; O.R. 650, p. 1781; O.R. 751, p. 814; O.R. 892, p. 1059;
O.R. 913, p. 163; O.R. 920, p. 1745. Highlands County: O.R. 885, p. 377;
O.R. 897, p. 590; O.R. 947, p. 374; O.R. 1075, p. 69; O.R. 1199, p. 0414;
O.R. 1216, p. 657; O.R. 1221, p. 1890. Lake County: M.B. 85 p. 564; M.B. 86
p. 1; M.B. 108 p. 425; M.B. 109 p. 33; M.B. 110 p. 565; M.B. 116 p. 171;
M.B. 121 p. 237; M.B. 150 p. 459; M.B. 161 p. 541; M.B. 172 p. 465; M.B.
179 p. 77; M.B. 183 p. 360; M.B. 194 p. 335; O.R. 29 p. 358; O.R. 70 p. 20;
O.R. 114 p. 188; O.R. 153 p. 11; O.R. 188 p. 432; O.R. 196 p. 109; O.R. 264
p. 899; O.R. 283 p. 525; O.R. 422 p. 64; O.R. 454 p. 9; O.R. 484 p. 362;
O.R. 510 p. 84; O.R. 565 p. 930; O.R. 750 p. 1494; O.R. 884, p. 1085; O.R.
920, p. 816; O.R. 1027, p. 2289; O.R. 1200, p. 0812; O.R. 1225, p. 1430;
O.R. 1235, p. 1085. Lee County: O.R. 1846, p. 1769; O.R. 1858, p. 4657;
O.R. 1917, p. 3070; O.R. 2098, p. 1945; O.R. 2347, p. 0583; O.R. 2387,
p. 1402; O.R. 2403, pp.1793-1825. Levy County: M.B. 2 p. 10; M.B. 2 p. 270;
M.B. 2 p. 324; M.B. 2 p. 422; M.B. 4 p. 34; M.B. 4 p. 251; M.B. 4 p. 420;
M.B. 4 p. 569; M.B. 5 p. 426; M.B. 8 p. 391; M.B. 9 p. 540; M.B. 11 p. 325;
M.B. 12 p. 179; M.B. 12 p. 540; M.B. 14 p. 440; M.B. 16 p. 434; M.B. 19
p. 17; M.B. 21 p. 588; M.B. 24 p. 378; M.B. 26 p. 566; M.B. 27 p. 320; M.B.
32 p. 423; M.B. 34 p. 263; O.R. 18 p. 197; O.R. 28 p. 753; O.R. 38 p. 2;
O.R. 47 p. 399; O.R. 66 p. 587; O.R. 193 p. 59; O.R. 274, p. 475; O.R. 293,
p. 274; O.R. 369, p. 676; O.R. 0478, p. 107; O.R. 492, p. 292; O.R. 0497,
p. 435. Marion County: M.B. 95 p. 126; M.B. 96 p. 190; M.B. 107 p. 266;
M.B. 110 p. 431; M.B. 113 p. 450; M.B. 118 p. 401; M.B. 127 p. 359; M.B.
155 p. 274; M.B. 170 p. 494; M.B. 185 p. 231; M.B. 193 p. 515; M.B. 200
p. 40; M.B. 213 p. 306; M.B. 227 p. 17; M.B. 243 p. 324; O.R. 31 p. 305;
O.R. 63 p. 457; O.R. 96 p. 1; O.R. 103 p. 454; O.R. 193 p. 1; O.R. 0222
p. 0435; O.R. 0449 p. 0701; O.R. 0495 p. 0341; O.R. 0533 p. 0670; O.R. 0570
p. 0708; O.R. 0653 p. 0453; O.R. 1112 p. 1058; O.R. 1363, p. 952; O.R.
1427, p. 1343; O.R. 1605, p. 430; O.R. 1884, p. 1721; O.R. 1925, p. 146;
O.R. 1939, p.1812. Monroe County: O.R. 973 p. 1496; O.R. 982, p. 787; O.R.
1012, p. 1947; O.R. 1106, p. 0174; O.R. 1236, p. 2309; O.R. 1256, p. 2161;
O.R. 1264, pp. 586-617. Okeechobee County: O.R. 277 p. 1697; O.R. 279,
p. 1659; O.R. 237, p. 124; O.R. 307, p. 998; O.R. 340, p. 325; O.R. 345,
p. 82; O.R. 346, p. 1021. Orange County: M.B. 266, p. 397; M.B. 285 p. 443;
M.B. 325 p. 403; M.B. 344 p. 352; M.B. 350 p. 487; M.B. 369 p. 344; M.B.
394 p. 442; M.B. 507 p. 601; M.B. 547 p. 356; M.B. 586 p. 465; M.B. 612
p. 672; O.R. 48 p. 396; O.R. 173 p. 418; O.R. 293 p. 700; O.R. 467, p. 159;
O.R. 691 p. 294; O.R. 862 p. 236; O.R. 1006 p. 652; O.R. 1032 p. 718; O.R.
1346 p. 744; O.R. 1430, p. 912; O.R. 2022 p. 842; O.R. 2170 p. 581; O.R.
2303 p. 590; O.R. 2420 p. 231; O.R. 2569 p. 841; O.R. 3283 p. 2308; O.R.
3807, p. 1587; O.R. 3888, p. 166; O.R. 4117, p. 1085; O.R. 4498, p. 1915;
O.R. 4561, p. 4305; O.R. 4585, p. 1953. Osceola County: M.B. 16 p. 246;
M.B. 17 p. 86; M.B. 19 p. 480; M.B. 20 p. 361; M.B. 24 p. 123; M.B. 24
p. 507; M.B. 25 p. 371; M.B. 36 p. 221; M.B. 39 p. 438; M.B. 43 p. 208;
M.B. 45 p. 30; M.B. 46 p. 328; M.B. 50 p. 299; O.R. 15 p. 1; O.R. 33
p. 465; O.R. 56 p. 39; O.R. 72 p. 382; O.R. 84 p. 526; O.R. 87 p. 501; O.R.
120 p. 143; O.R. 130 p. 327; O.R. 211 p. 465; O.R. 234 p. 338; O.R. 251
p. 19; O.R. 266 p. 167; O.R. 297 p. 20; O.R. 582 p. 774; O.R. 810, p. 2240;
O.R. 840, p. 827; O.R. 938, p. 2690; O.R. 1100, p. 0375; O.R. 1124,
p. 2305; O.R. 1132, p. 2327. Palm Beach County: O.R. 4872 p. 633; O.R. 4893
p. 94; O.R. 4949, p. 1794; O.R. 5285, p. 998; O.R. 6205, p. 725; O.R. 7512,
p. 124; O.R. 7708, p. 22; O.R. 7786, p. 423. Pasco County: M.B. 38 p. 246;
M.B. 38 p. 384; M.B. 41 p. 414; M.B. 44 p. 396; M.B. 46 p. 284; M.B. 47
p. 266; M.B. 48 p. 556; M.B. 62 p. 125; O.R. 4 p. 36; O.R. 20 p. 289; O.R.
30 p. 54; O.R. 37 p. 367; O.R. 61 p. 188; O.R. 80 p. 495; O.R. 106 p. 279;
O.R. 137 p. 356; O.R. 166 p. 569; O.R. 191 p. 691; O.R. 197 p. 290; O.R.
261 p. 639; O.R. 287 p. 218; O.R. 525 p. 126; O.R. 581 p. 497; O.R. 636
p. 609; O.R. 689 p. 16; O.R. 766 p. 1479; O.R. 1191 p. 42; O.R. 1522,
p. 1777; O.R. 1609, p. 0001; O.R. 1842, p. 1967; O.R. 3096, p. 0047; O.R.
3149, p. 1290; O.R. 3169, p. 1936. Polk County: O.R. 2420 p. 133; O.R. 2442
p. 428; O.R. 2530, p. 236; O.R. 2781, p. 2255; O.R. 3178, p. 0030; O.R.
3235, p. 1286; O.R. 3255, p. 2169. St. Lucie County: O.R. 499, p. 1715;
O.R. 508, p. 702; O.R. 543, p. 302; O.R. 655, p. 2685; O.R. 0819, p. 1114;
O.R. 0840, p. 2914; O.R. 848, p. 1282. Seminole County: O.R. 1394 p. 1086;
O.R. 1729 p. 490; O.R. 1754, p. 1170; O.R. 1849, p. 1983; O.R. 2109,
p. 0502; O.R. 2517, p. 1183; O.R. 2585, p. 0040; O.R. 2611, p. 308. Sumter
County: M.B. 22 p. 219; M.B. 22 p. 341; M.B. 25 p. 328; M.B. 26 p. 95; M.B.
26 p. 299; M.B. 27 p. 427; M.B. 29 p. 92; M.B. 35 p. 538; M.B. 38 p. 267;
M.B. 40 p. 453; M.B. 41 p. 458; M.B. 42 p. 368; M.B. 44 p. 478; M.B. 47
p. 10; O.R. 8 p. 175; O.R. 18 p. 262; O.R. 27 p. 580; O.R. 36 p. 465; O.R.
38 p. 378; O.R. 59 p. 302; O.R. 66 p. 639; O.R. 115 p. 485; O.R. 125
p. 531; O.R. 134 p. 162; O.R. 141 p. 491; O.R. 156 p. 741; O.R. 259 p. 50;
O.R. 328, p. 433; O.R. 345, p. 238; O.R. 394, p. 381; O.R. 470, p. 390;
O.R. 482, p. 388; O.R. 487, p. 12. Volusia County: O.R. 2817 p. 1724; O.R.
2849, p. 0999; O.R. 2982, p. 1667; O.R. 3364, p. 403; O.R. 3793, p. 0075;
O.R. 3827, p. 3954; O.R. 3840, p. 1729.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000037664
<NAME> UNITED TELEPHONE COMPANY OF FLORIDA
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 9,473
<SECURITIES> 0
<RECEIVABLES> 165,239
<ALLOWANCES> 3,318
<INVENTORY> 27,426
<CURRENT-ASSETS> 213,779
<PP&E> 2,477,596
<DEPRECIATION> 1,076,007
<TOTAL-ASSETS> 1,665,294
<CURRENT-LIABILITIES> 250,361
<BONDS> 439,495
<COMMON> 16,250
1,979
0
<OTHER-SE> 677,108
<TOTAL-LIABILITY-AND-EQUITY> 1,665,294
<SALES> 0
<TOTAL-REVENUES> 865,198
<CGS> 0
<TOTAL-COSTS> 520,011
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,480
<INCOME-PRETAX> 176,023
<INCOME-TAX> 65,775
<INCOME-CONTINUING> 110,248
<DISCONTINUED> 0
<EXTRAORDINARY> (215)
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</TABLE>
ARTICLES OF INCORPORATION
OF
UNITED TELEPHONE COMPANY OF FLORIDA
ARTICLE I
NAME
The name of this Corporation shall be
UNITED TELEPHONE COMPANY OF FLORIDA
ARTICLE II
PLACE OF BUSINESS
The principal place of business of this Corporation shall be Apopka, Orange
County, Florida, but it may establish offices and agencies in any place or
places in or out of the State of Florida.
ARTICLE III
BUSINESS
The general nature of the business to be transacted is:
To acquire, purchase, construct, lease, maintain, operate and market
telephone, telegraph, radio and other systems, plants and lines, or either
or any of them, in all their branches for the transmission of messages and
communications; to acquire and hold such franchises from municipal
corporations as it shall deem necessary, and under such franchises and its
charter powers to acquire, purchase, construct, lease, maintain, operate
and market telephone, telegraph, radio, and other systems, plants and
lines, or either or any of them, in all their branches for the transmission
of messages and communications for the use of municipalities and the
citizens thereof; to acquire, purchase, hold, lease and market real estate,
office buildings, telephone, telegraph and radio exchange buildings,
chattels and effects, and other property which may be desirable or useful
in carrying on the business of this Corporation.
To acquire, purchase, construct, lease, operate and maintain telephone
lines and exchanges within the State of Florida and to acquire, purchase,
construct, lease, operate and maintain a toll line system connecting the
said exchanges and other exchanges operated by other companies in the State
of Florida and elsewhere.
In general to carry on any other business in connection with each and all
of the foregoing or incidental thereto, and to carry on, transact and
engage in any and every lawful business or other lawful thing calculated to
be of gain, profit or benefit to the Corporation; and to have and exercise
each and all of the powers and privileges, either direct or incidental,
which are given and provided by or are available under the laws of the
State of Florida in respect of corporations organized for profit
thereunder.
ARTICLE IV
CAPITAL STOCK
(a) Amount and Designation of Classes - The amount of capital stock
authorized is $57,000,000, consisting of three classes: 16,000,000 shares
of Common Stock of the par value of $2.50 each, having an aggregate par
value of $40,000,000; 1,500,000 shares of Preferred Stock of the par value
of $10.00 each, having an aggregate par value of $15,000,000; and 2,000,000
shares of Class A Cumulative Preferred Stock of the par value of $1.00
each, having an aggregate par value of $2,000,000. Shares of Class A
Cumulative Preferred Stock shall be of equal rank and on a parity with
share of Preferred Stock.
Each issue of Preferred Stock and Class A Cumulative Preferred Stock shall
be designated by a series for the year in which it is issued. The Board of
Directors of the Corporation shall have the authority, by resolution or
resolutions in the form of a Certificate of Designation, to establish and
designate the respective series and, consistent with the provisions of this
Article IV, to fix and determine for each series:
(i) the rate or manner of payment of dividends on shares of such series;
(ii) the redemption price and the terms and conditions of redemption of
shares of such series;
(iii) the amount payable upon shares of such series in the event of
voluntary and involuntary liquidation;
(iv) sinking fund provisions, if any, for the redemption or purchase of
shares of such series;
(v) the terms and conditions, if any, on which shares of such series may
be converted;
(vi) in the case of Class A Cumulative Preferred Stock, voting rights, if
any.
(b) Dividends on Preferred Stock and on Class A Cumulative Preferred Stock
- The holders of record of Preferred Stock of any series shall be entitled
to receive, when and as declared by the Board of Directors, out of the
earning of the Corporation, cash dividends at such rates as agreed upon
between the purchases and the Corporation in the case of private issues,
and at such rates as authorized by the Board of Directors in the case of
public issues, but in any event not in excess of 60 cents per share per
-2-
annum, payable in four equal quarterly installments on the 1st days of
January, April, July and October of each year. Each series of Preferred
Stock shall carry such dividend rate as prescribed for that series.
The holders of record of Class A Cumulative Preferred Stock of any series
shall be entitled to receive, when and as declared by the Board of
Directors, out of the earnings of the Corporation, cash dividends at such
rates as agreed upon between the purchasers and the Corporation in the case
of private issues, and at such rates as authorized by the Board of
Directors in the case of public issues, payable in four equal quarterly
installments of the 1st days of March, June, September and December in each
year. Each series of Class A Cumulative Preferred Stock shall carry such
dividend rate as prescribed for that series.
The record date for the payment of dividends on the Preferred Stock and the
Class A Cumulative Preferred Stock shall be the date, not to exceed 60 days
preceding the dividend payment date, fixed from time to time by the Board
of Directors.
Dividends on all series of the Preferred Stock and on all series of the
Class A Cumulative Preferred Stock shall be payable before:
(i) Any dividends shall be declared, paid on or set apart for, or any
distribution made or ordered in respect of, Common Stock, or
(ii) Any moneys shall be set aside for or applied to the redemption of
Common Stock, or
(iii) Any sum shall be paid or set apart for the redemption of Preferred
Stock or Class A Cumulative Preferred Stock.
Dividends upon the Preferred Stock of any series and on the Class A
Cumulative Preferred Stock of any series shall be cumulative from date of
issue and shall be deemed to accrue from day to day regardless of whether
or not the Corporation shall have funds legally available for the payment
of such dividends, but accumulation of dividends shall not bear interest.
No dividend shall be declared on any series of the Preferred Stock or Class
A Cumulative Preferred Stock for any quarter-yearly dividend period unless
there shall likewise be paid or declared and set apart for payment
dividends on all shares at the time outstanding of all series of the
Preferred Stock and Class A Cumulative Preferred Stock, in respect of the
then current quarter-yearly dividend period for each series. In case the
dividends for such period are not paid in full, all shares of Preferred
Stock and Class A Cumulative Preferred Stock of all series shall
participate ratably in the payment of dividends in proportion to the full
amounts of dividends for the then current quarter-yearly dividend period to
which they are respectively entitled.
(c) Purchase Fund or Sinking Fund for Preferred Stock and Class A
Cumulative Preferred Stock - A purchase fund or an annual sinking fund for
the retirement of Preferred Stock of any series or for the retirement of
Class A Cumulative Preferred Stock of any series may or may not be
prescribed as agreed upon between the purchasers and the Corporation in the
-3-
case of private issues and as authorized or not authorized by the Board of
Directors in the case of public issues.
Such purchase fund or sinking fund as may be prescribed for any series
shall be cumulative so that if less than the required number of shares
shall be acquired by the Corporation in any year on or before the annual
payment date specified for such series, the amount of such deficiency shall
thereafter be acquired by the Corporation and such deficiency removed
before:
(i) Any dividends shall be declared, paid on or set apart for, or any
distribution made or ordered in respect of, Common Stock, or
(ii) Any moneys shall be set aside for or applied to the redemption of
Common Stock, or
(iii) Any sum shall be paid or set apart for the optional redemption of
Preferred Stock or Class A Cumulative Preferred Stock.
(d) Redemption of Preferred Stock and Class A Cumulative Preferred Stock -
(1) Right to Redeem and Price - Any and all Preferred Stock of any series
not called for sinking fund purposes under any series may be redeemed at
the option of the Corporation on any dividend payment date by resolution of
its Board of Directors and upon 30 days' written notice thereof to the
holders of such Preferred Stock of any series at a price or prices and over
such periods of time as may be agreed upon between the purchasers and the
Corporation in the case of private issues and as authorized by the Board of
Directors in the case of public issues, plus an amount equal to dividends
accruing and unpaid on such Preferred Stock up to and including the date
fixed for redemption whether or not earned or declared.
Any and all Class A Cumulative Preferred Stock of any series not called for
sinking fund purposes under any series may be redeemed at the option of the
Corporation at any time or times by resolution of its Board of Directors
and upon 30 days' written and published notice thereof to the holders of
such Class A Cumulative Preferred Stock of any series at a price or prices
and over such periods of time as may be agreed upon between the purchasers
and the Corporation in the case of private issues and as authorized by the
Board of Directors in the case of public issues, plus an amount equal to
dividends accruing and unpaid on such Class A Cumulative Preferred Stock up
to and including the date fixed for redemption whether or not earned or
declared.
(2) Manner of Redemption - If less than all of the outstanding shares of
Preferred Stock and Class A Cumulative Preferred Stock are to be called for
redemption, redemption may be made of the whole or any part of the
outstanding shares of any one or more series thereof, in the discretion of
the Board of Directors, and if less than all of the outstanding shares of
any series are to be redeemed, the shares of such series to be redeemed
shall be selected either by lot or pro rata, as determined and in a manner
prescribed for such series.
-4-
(3) Notice of Redemption - Not less than 30 or more than 60 days previous
to the date fixed for redemption or purchase for the sinking fund, a notice
specifying the time and place thereof shall be given to the holders of
record of Preferred Stock of any series or of the Class A Cumulative
Preferred Stock of any series to be redeemed or so purchased, by mail, in
the names and at the addresses as the same shall appear on the
stockholders' ledger maintained by the Corporation and also as may have
theretofore been furnished in writing to the Corporation by such
stockholders. The time of mailing such notice shall be deemed to be the
time of the giving thereof. In the case of the optional redemption of
Class A Cumulative Preferred Stock, the Corporation shall also give notice
of the proposed redemption, not less than 30 or more than 60 days prior to
the date fixed for redemption, by publication at least once in a daily
newspaper printed in the English language and of general circulation in
Orange County, the State of Florida, and in the Borough of Manhattan, the
City and State of New York. At any time after notice of redemption or
purchase for the sinking fund has been given in the manner prescribed
above, the Corporation may deposit the aggregate redemption or purchase
price in trust with the bank or trust company (in good standing, organized
under the laws of the United States of America, or of the State of Florida,
doing business in the City of Orlando, Orange County, Florida, and having a
combined capital and surplus aggregating at least $50,000,000), named in
such notice for payment on the date fixed for redemption or purchase to the
holders of shares so to be redeemed or purchased (on endorsement if
required by the Board of Directors), and upon surrender of certificates of
such shares, upon the deposit of such money, or if no such deposit is made,
upon such redemption or purchase date (unless the Corporation shall default
in making payment of the redemption or purchase price as set in such
notice) such holders shall cease to be stockholders with respect to such
shares and shall have no voting or other rights with respect to such
shares, except the right to receive such moneys on the date fixed for
redemption or purchase from such bank or trust company, or from the
Corporation, without interest thereon, upon endorsement if required, and
surrender of the certificates, and the shares represented thereby shall no
longer be outstanding; provided, however, that no then existing right of
conversion, if any, with respect to such shares shall be impaired by the
deposit of money prior to the redemption or purchase date. In case less
than all the shares represented by any surrendered certificates are
redeemed or purchased, a new certificate shall be issued without charge
representing the unredeemed shares.
(4) Unclaimed Deposits - The Corporation shall be entitled to receive,
from time to time, from the depository the interest, if any, allowed on
such moneys deposited with it, and the holders of any shares so redeemed or
purchased shall have no claim to any such interest. Any moneys so
deposited and remaining unclaimed at the end of two (2) years from the
redemption or purchase date shall, if thereafter requested by resolution of
the Board of Directors, be repaid to the Corporation, and in the event of
such repayment, such holders of record of the shares so called for
redemption or purchase as shall not have made claim against such moneys
prior to such repayment to the Corporation shall be deemed to be unsecured
creditors of the Corporation for an amount equivalent to the amount
deposited as above stated for the redemption or purchase of such shares and
-5-
so repaid to the Corporation, but shall in no event be entitled to any
interest.
(5) Cancellation of Redeemed Shares - All shares of Preferred Stock and
Class A Cumulative Preferred Stock redeemed or purchased by the Corporation
shall be cancelled, but such cancellation shall not operate to reduce the
total authorized capital; other shares of Preferred Stock or Class A
Cumulative Preferred Stock may be issued in lieu thereof, but shares so
acquired shall not be reissued as shares of the same or any theretofore
outstanding series.
(e) Preference as to Assets - The Preferred Stock and the Class A
Cumulative Preferred Stock of any series shall be preferred over the Common
Stock as to the net assets of the Corporation no matter in which
liabilities the net assets are reflected on its balance sheet, including,
but not limiting the generality thereof, liabilities for stated capital and
surplus.
(f) Dissolution -
(1) Involuntary Dissolution - In the event of any involuntary dissolution,
liquidation or winding up of the Corporation, the holders of Preferred
Stock of any series shall be entitled to receive out of the net assets of
the Corporation the par value thereof, and the holders of the Class A
Cumulative Preferred Stock of any series shall be entitled to receive out
of the net assets of the Corporation the amount per share fixed in the
Articles of Incorporation for such series, plus in each case an amount
equal to all dividends accrued and unpaid on each share up to and including
the date fixed for distribution, whether or not earned or declared, and no
more, before any distribution shall be made to the holders of Common Stock.
(2) Voluntary Dissolution - In the event of any voluntary dissolution,
liquidation or winding up of the Corporation, or any voluntary reduction of
its capital Stock resulting in the distribution of any of its net assets to
its stockholders, the holders of Preferred Stock of any series shall be
entitled to receive out of the net assets of the Corporation an amount
equal to the dividends accumulated and unpaid thereon, up to and including
the date fixed for distribution, together with the par value of the
Preferred Stock and the then existing call price premium fixed for that
series of Preferred Stock, and the holders of Class A Cumulative Preferred
Stock shall be entitled to receive out of the net assets of the Corporation
an amount equal to the dividends accumulated and unpaid thereon, up to and
including the date fixed for distribution, together with an amount per
share fixed for the redemption of that series of Class A Cumulative
Preferred Stock, before any distribution shall be made to the holders of
Common Stock.
(3) Pro Rate Distribution - If upon liquidation, dissolution or winding-up
of the Corporation, whether voluntary or involuntary, the net assets of the
Corporation shall be insufficient to permit the payment of the full
preferential amount to which the shares of Preferred Stock and Class A
Cumulative Preferred Stock are entitled, then the entire net assets of the
Corporation shall be distributed ratably to all outstanding shares of
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Preferred Stock and Class A Cumulative Preferred Stock in proportion to the
full preferential amount to which each such share is entitled. Neither a
consolidation nor merger of the Corporation with or into any other
corporate entity or entities, nor the sale of all or substantially all of
the assets of the Corporation, shall be deemed to be a liquidation,
dissolution or winding-up within the meaning of this section.
(g) Dividends on Common Stock - The Corporate will not pay dividends on
any Common Stock while any default exists in the payment of any dividend or
any sinking fund requirement of any series of Preferred Stock or Class A
Cumulative Preferred Stock. The term "Common Stock" wherever used in this
Article IV means stock of any class junior to the Preferred Stock and the
Class A Cumulative Preferred Stock whether or not such stock is denominated
as Common Stock.
(h) Rights of Holders of Preferred Stock and Class A Cumulative Preferred
Stock as to Limitation on Certain Corporate Actions - Without the consent
of the holder or holders of an amount equal to or exceeding two-thirds par
value of the then outstanding Preferred Stock (all series) voting as a
class and the holder or holders of at least two-thirds of the then
outstanding Class A Cumulative Preferred Stock (all series) voting as a
class the Corporation shall not:
(i) Authorize or create, or increase the authorized amount of, any stock
ranking prior to the Preferred Stock and the Class A Cumulative Preferred
Stock, or authorize or create, or increase the authorized amount of, any
stock or obligations convertible into or evidencing the right to purchase
any stock ranking prior to the Preferred Stock and the Class A Cumulative
Preferred Stock.
(ii) Issue any stock ranking prior to the Preferred Stock and the Class A
Cumulative Preferred Stock.
(iii) Pay any cash dividend on the Common Stock of the Corporation except
out of the net income or earned surplus of the Corporation and only if
after the payment of such dividends the earned surplus of the Corporation
shall be in the amount of $300,000 or in excess thereof.
(iv) Allow the total of the funded debt and the Preferred Stock and the
Class A Cumulative Preferred Stock of all series outstanding at any one
time to exceed an amount equal to 70% of the total paid-in-capitalization
and earned surplus.
(v) Retire, purchase or otherwise acquire for value any of the Common
Stock of the Corporation, or pay, set aside or make available any moneys to
or for a sinking fund for the purchase or redemption of any such Common
Stock.
(vi) Amend, alter, modify, waive or repeal any of the covenants or
provisions of the Articles of Incorporation so as to adversely affect the
Preferred Stock or the Class A Cumulative Preferred Stock or the holders of
such stock; provided, however, that if any such amendment, alteration,
modification, waiver or repeal would adversely affect any particular series
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without correspondingly affecting all series, then a like vote or consent
by the holders of the shares of that particular series shall also be
necessary for effecting or validating any such amendment, alteration,
modification, waiver or repeal.
(vii) Merge or consolidate with or into any other corporation, if as a
result thereof, (a) the surviving corporation would have authorized or
outstanding any shares of stock ranking prior to the Preferred Stock or the
Class A Cumulative Preferred Stock, or (b) any holder of Preferred Stock or
Class A Cumulative Preferred Stock immediately prior to the merger or
consolidation would receive a different number of shares of the surviving
corporation, or (c) there would be any adverse change in the rights,
preferences, terms, provisions and powers of any outstanding Preferred
Stock or Class A Cumulative Preferred Stock of any series.
(i) Voting Rights of Stockholders -
(1) General - At each meeting of the stockholders every holder of Common
Stock and Preferred Stock (all series) shall be entitled to cast one vote,
on each matter on which stockholders of record shall be entitled to vote,
for each share of such stock standing in such holder's name on the record
books of the Corporation on the record date fixed for the determination of
stockholders entitled to vote at such meeting. Such holders shall vote
together on all such matters and not by classes or series, except when and
as may be otherwise required by law or these Articles of Incorporation.
Unless otherwise provided for a specific series of the Class A Cumulative
Preferred Stock, the Class A Cumulative Preferred Stock shall not be
entitled to notice of any meeting of shareholders and shall not have the
right to vote for the election of directors or for any other purpose,
except as set forth in subsection (2) below.
(2) Special Voting Rights of Preferred Stock and Class A Cumulative
Preferred Stock - The holders of Preferred Stock (all eries) voting as a
class shall be entitled to elect a majority of the Board of Directors, and
the holders of Class A Cumulative Preferred Stock (all series) voting
together as a class shall be entitled to elect two members of the Board of
Directors, if:
(i) a default has occurred in the provisions set out in section (h); or
(ii) default has occurred in the payment of four quarterly dividends on
the Preferred Stock or the Class A Cumulative Preferred Stock of any
series; or
(iii) default has occurred in the payment of two sinking fund
installments, or calling of stock for sinking fund requirements in each of
two years.
Whenever such voting rights vest in the holders of Preferred Stock (all
series) and Class A Cumulative Preferred Stock (all series), such rights
shall be exercisable either at a special meeting or meetings of such
holders or at any annual meeting of shareholders held for the purpose of
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electing directors. In addition to the right to elect two directors, upon
the vesting of such voting rights in the Class A Cumulative Preferred Stock
and except for the right of the holders of the Common Stock and the
Preferred Stock to elect the remaining directors, the holders of the Class
A Cumulative Preferred Stock shall have the right to receive notice of, and
to vote at, any meeting of the shareholders in the same manner as holders
of the Common Stock and Preferred Stock.
Such voting rights shall continue until such default or defaults are cured
and all dividends on, and sinking fund requirements of, the Preferred Stock
and Class A Cumulative Preferred Stock are currently paid and complied
with, at which time such rights shall cease and the term of office of all
directors elected by the Preferred Stock and Class A Cumulative Preferred
Stock shall terminate.
(3) Procedure for Exercising Special Voting Rights of Class A Cumulative
Preferred Stock - At any time when the special voting right shall have
vested in the holders of the Class A Cumulative Preferred Stock as provided
in subsection (2), and if such right shall not already have been initially
exercised, a proper officer of the Corporation shall, upon the written
request of the holders of record of at least twenty percent (20%) of the
Class A Cumulative Preferred Stock then outstanding addressed to the
Secretary of the Corporation, call a special meeting of all such holders
for the purpose of exercising their rights. Such meeting shall be held at
the earliest practicable date at a place in the city where the principal
office of the Corporation is then located, to be specified in the notice of
such meeting. If such meeting shall not be called within twenty (20) days
after the personal service of such written request upon the Secretary of
the Corporation, or within twenty (20) days after the mailing of the same
within the Untied States of America by registered mail addressed to the
Secretary of the Corporation at its principal office, then the holders of
records of at least twenty percent (20%) of the shares of the Class A
Cumulative Preferred Stock then outstanding may designate in writing one of
their numbers to call such meeting at the expense of the Corporation, and
such meeting may be called by such person so designated in the manner and
at the place above stated. Any holder of Class A Cumulative Preferred
Stock so designated shall have access to the stock books of the Corporation
for the purpose of causing a meeting to be called pursuant to these
provisions.
At any meeting at which the holders of Class A Cumulative Preferred Stock
shall have the right to elect directors as provided in subsection (2), the
presence, in person or by proxy, of the holders of 33-1/3% of the Class A
Cumulative Preferred Stock at the time outstanding shall constitute a
quorum. At any such meeting or any adjournment thereof, (a) the absence of
a quorum of the holders of Class A Cumulative Preferred Stock shall not
prevent the election of directors other than those to be elected by the
holders of Class A Cumulative Preferred Stock voting as a class, and the
absence of a quorum of holders of the shares entitled to vote for directors
other than those to be elected by the holders of Class A Cumulative
Preferred Stock shall not prevent the election of the directors to be
elected by holders of Class A Cumulative Preferred Stock, and (b) in the
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absence of a quorum of the holders of Class A Cumulative Preferred Stock,
the holders of a majority of such shares present in person or by proxy
shall have power to adjourn from time to time the meeting for the election
of the directors which they, voting as a class, are entitled to elect,
without notice other than announcement at the meeting, until a quorum shall
be present, and in the absence of a quorum of the holders of the shares
entitled to vote for directors other than those elected by the holders of
Class A Cumulative Preferred Stock, the holders of a majority of such other
shares present in person or by proxy shall have the power to adjourn from
time to time the meeting for the election of the directors which they are
entitled to elect, without notice other than announcement at the meeting,
until a quorum shall be present.
If the office of any director elected by the holders of Class A Cumulative
Preferred Stock becomes vacant by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, the remaining director
elected by the holders of Class A Cumulative Preferred Stock may choose a
successor who shall hold office for the unexpired term in respect of which
such vacancy occurred.
(j) Limitation upon and Required Corporation Action Pending Retirement of
Preferred Stock - Until such time as the Corporation shall have redeemed or
otherwise retired and cancelled all of the Preferred Stock issued
hereunder:
(i) the Corporation will not make loans or advances to officers,
employees, stockholders or others except in the ordinary course of
business;
(ii) the Corporation will furnish annual audits in duplicate to each
holder of 10% or more of the par value of the outstanding Preferred Stock,
prepared by a recognized and duly licensed certified public accountant,
within 90 days after the end of each fiscal year.
(k) Additional Issues of Preferred Stock and Class A Cumulative Preferred
Stock and Earnings Coverage - Additional series of Preferred Stock or Class
A Cumulative Preferred Stock may be issued through authorization by the
Board of Directors of the Corporation from time to time, up to the amount
authorized in the Articles of Incorporation, without the approval or
consent of the holders of outstanding Common Stock, Preferred Stock or
Class A Cumulative Preferred Stock, but only when the income available for
fixed charges of the Corporation for any consecutive twelve months out of
the fifteen months immediately preceding the date of issue of the
additional series equals at least one and one-half times the annual bond
interest and amortization charges and dividend charges on Preferred Stock
and Class A Cumulative Preferred Stock, including the dividend charges on
the new series.
(l) Payment for Common Stock - All or any of the Common Stock of the
Corporation, if sold, may be paid for in cash, but may also be paid for in
property, labor or services at a just valuation to be fixed by the Board of
Directors at a meeting called for that purpose. Property, labor or
services may also be purchased or paid for with Common Stock at a just
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valuation of such property, labor or services, to be fixed by the Board of
Directors of the Corporation at a meeting called for such purpose. In no
event shall such just valuation be less than par value.
(m) Preemptive Rights of Holders of Common Stock - No issues of any class
of Common Stock shall be required to be first offered to the then existing
stockholders of such class of Common Stock.
(n) Definitions - Wherever used in this Article IV, the terms hereinafter
set forth shall have the following meanings, respectively, to wit:
"Accrued dividends" or "dividends accrued", wherever used with reference to
the Preferred Stock or the Class A Cumulative Preferred Stock or any series
thereof, means an amount which shall be equal to dividends thereon at the
rate per annum fixed for the particular series, computed from the date from
which such dividends become cumulative on such shares to the date with
reference to which the expression is used, irrespective of whether such
amount or any part thereof shall have been declared as dividends or there
shall have existed funds legally available for the declaration and payment
thereof, less the aggregate amount of dividends theretofore paid thereon.
"Cash Dividend" means any distribution of cash or property of any kind
other than a distribution solely in Common Stock of the Corporation.
"Funded Debt" means all debt payable more than twelve months after the
original incurrence or creation thereof.
"Income available for fixed charges" means income after payment of all
operating expenses and taxes, plus other income, and less any miscellaneous
deductions from income.
"Paid-in capitalization" means the sum of funded debt, Preferred Stock,
Class A Cumulative Preferred Stock, Common Stock and premium on capital
stock less capital stock expense and any deficit in the earned surplus
account.
"Quarter-yearly dividend period", wherever used with reference to the
Preferred Stock, means the period of three calendar moths immediately
preceding the first days of January, April, July and October, respectively,
in each year, and wherever used with reference to the Class A Cumulative
Preferred Stock, means the period of three calendar months immediately
preceding the first days of March, June, September and December,
respectively, in each year.
Any reference in the Articles of Incorporation to shares ranking prior to
or on a parity with the Preferred Stock and the Class A Cumulative
Preferred Stock shall be deemed to refer to any such shares, respectively,
ranking prior to or on a parity with the Preferred Stock and the Class A
Cumulative Preferred Stock in respect of dividends and distributions of
assets on liquidation.
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ARTICLE V
TERM
This Corporation shall have perpetual existence.
ARTICLE VI
The business of this Corporation shall be conducted by the Board of
Directors and by the following officers: Chairman of the Board, President,
one or more Vice Presidents, Secretary, Treasurer, and Controller. The
Board of Directors shall consist of not less than seven nor more than
twenty-one persons. The number of directors may be changed from time to
time through the bylaws, but shall never be less than seven. More than one
office may be held by one and the same person. The Board of Directors may
appoint an Executive Committee and such other officers of the Corporation,
having such powers, duties and terms of office as such Board of Directors
may deem advisable, and as may be provided by the bylaws of the
Corporation.
The annual meeting of the stockholders shall be held at such time and place
as provided in the bylaws of the Corporation.
The bylaws may be adopted or amended only by a majority of all the voting
stock of the Corporation voting in person or by proxy.
ARTICLE VII
ESTABLISHMENT OF SERIES OF PREFERRED STOCK
AND CLASS A CUMULATIVE PREFERRED STOCK
(a) 100,000 shares of the Preferred Stock shall be designated as 5.40%
Cumulative Preferred Stock, Series 1959, and shall have the rights and
preferences as follows:
(i) Dividend Rate. The dividend rate for such series shall be 5.40% of
the par value of each share per annum.
(ii) Redemption Price. The redemption price per share for shares of such
series redeemed at the option of the Corporation shall be $11.00 if
redeemed on or before October 1, 1964; $10.50 if redeemed thereafter and on
or before October 1, 1969; $10.30 if redeemed thereafter and on or before
October 1, 1974; and $10.20 if redeemed thereafter.
(iii) Sinking Fund. So long as any shares of the 5.40% Cumulative
Preferred Stock, Series 1959, remain outstanding, the Corporation shall set
aside, as and for a sinking fund for the redemption and retirement of
shares of such series, beginning October 1, 1962 and on or before October
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1, of each year thereafter a sum sufficient to redeem at the price of
$10.00 per share, plus an amount equal to accrued and unpaid dividends to
the date of redemption, 2% of said authorized issue of 5.40% Cumulative
Preferred Stock, Series 1959, or the sum of Twenty Thousand Dollars
($20,000).
Funds set aside for the sinking fund shall be applied by or at the
direction of the Corporation to the redemption of shares of 5.40%
Cumulative Preferred Stock, Series 1959, on October 1 of each year
beginning October 1, 1962.
(iv) Redemption. Shares of the 5.40% Cumulative Preferred Stock, Series
1959, shall be redeemed upon the same prior notice and with the same effect
as provided in Section (d) of Article IV, and the shares to be redeemed
shall be selected as hereinafter set forth.
In every case of redemption of less than all of the outstanding shares of
the 5.40% Cumulative Preferred Stock, Series 1959, at the option of the
Board of Directors such redemption shall be made pro rata or the shares of
such series to be redeemed shall be chosen by lot in such manner as may be
prescribed by resolution of the Board of Directors, provided, however, that
such selection shall be made as set forth below in respect of any holder of
record of shares of the 5.40% Cumulative Preferred Stock, Series 1959,
having 5% or more of the shares of such series registered in his name. If
at any time when any selection by lot is to be made 5% or more of the
aggregate number of shares of the 5.40% Cumulative Preferred Stock, Series
1959, are registered in the name of one holder, then before making the
selection by lot as aforesaid the Corporation shall allocate to each holder
of record holding 5% or more of the aggregate number of shares of such
series a proportion of the shares to be redeemed equal, as nearly as
practicable, to the proportion that the shares of such series then
outstanding registered in the name of such holder bears to all shares of
such series than outstanding. In such case the selection by lot of the
number of shares to be redeemed not so allocated shall be made from the
holders of record holding less than 5% of the aggregate number of shares of
such series.
(b) 60,000 shares of the Preferred Stock shall be designated as 5-1/4%
Cumulative Preferred Stock, Series 1961, and shall have the rights and
preferences as follows:
(i) Dividend Rate. The dividend rate for such series shall be 5-1/4% of
the par value of each share per annum.
(ii) Redemption Price. The redemption price per share for shares of such
series redeemed at the option of the Corporation shall be $11.00 if
redeemed on or before February 1, 1966; $10.50 if redeemed thereafter and
on or before February 1, 1971; $10.30 if redeemed thereafter and on or
before February 1, 1976; and $10.20 if redeemed thereafter; provided,
however, that no shares of such series shall be redeemable prior to
February 1, 1966, by use of proceeds from the sale of other securities or
borrowings by the Corporation at a cost of less than 5-1/4% per annum.
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(iii) Sinking Fund. So long as any shares of the 5-1/4% Cumulative
Preferred Stock, Series 1961, remain outstanding, the Corporation shall set
aside, as and for a sinking fund for the redemption and retirement of
shares of such series, beginning October 1, 1966 and on or before October 1
of each year thereafter a sum sufficient to redeem at the price of $10.00
per share, plus an amount equal to accrued and unpaid dividends to the date
of redemption, the percentages set forth below of the largest number of
shares of 5-1/4% Cumulative Preferred Stock, Series, 1961, theretofore
outstanding:
October 1, 1966
to and including
October 1, 1970 Two percent (2%)
October 1, 1971
and thereafter Three percent (3%)
Funds set aside for the sinking fund shall be applied by or at the
direction of the Corporation to the redemption of shares of 5-1/4%
Cumulative Preferred Stock, Series 1961, on October 1 of each year
beginning October 1, 1966.
(iv) Redemption. Shares of the 5-1/4% Cumulative Preferred Stock, Series
1961, shall be redeemed upon the same prior notice and with the same effect
as provided in Section (d) of Article IV, and the shares to be redeemed
shall be selected as hereinafter set forth.
In every case of redemption of less than all of the outstanding shares of
the 5-1/4% Cumulative Preferred Stock, Series 1961, at the option of the
Board of Directors such redemption shall be made pro rata or the shares of
such series to be redeemed shall be chosen by lot in such manner as may be
prescribed by resolution of the Board of Directors, provided, however, that
such selection shall be made as set forth below in respect of any holder of
record of shares of the 5-1/4% Cumulative Preferred Stock, Series 1961,
having 5% or more of the shares of such series registered in his name. If
at any time when any selection by lot is to be made 5% or more of the
aggregate number of shares of the 5-1/4% Cumulative Preferred Stock, Series
1961, are registered in the name of one holder, then before making the
selection by lot as aforesaid the Corporation shall allocate to each holder
of record holding 5% or more of the aggregate number of shares of such
series a proportion of the shares to be redeemed equal, as nearly as
practicable, to the proportion that the shares of such series then
outstanding registered in the name of such holder bears to all shares of
such series than outstanding. In such case the selection by lot of the
number of shares to be redeemed not so allocated shall be made from the
holders of record holding less than 5% of the aggregate number of shares of
such series.
(c) 348,000 shares of the preferred Stock shall be designated as 5%
Cumulative Preferred Stock, Series 1966, and shall have the rights and
preferences as follows:
(i) Dividend Rate. The dividend rate for such series shall be 5% of the
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par value of each share per annum.
(ii) Redemption Price. The redemption price per share for shares of such
series redeemed at the option of the Corporation shall be:
$10.50 if redeemed on or before March 1, 1971;
$10.40 if redeemed thereafter and on or before March 31, 1974;
$10.30 if redeemed thereafter and on or before March 31, 1977;
$10.20 if redeemed thereafter and on or before March 31, 1980;
$10.10 if redeemed thereafter and on or before March 31, 1983;
and $10.00 if redeemed thereafter;
provided, however, that no shares of such series shall not be redeemable
prior to March 31, 1971 if such redemption is the result of or is in
anticipation of refinancing, in whole or in part, outstanding shares of the
5% Cumulative Preferred Stock, Series 1966, (a) by the issuance of capital
stock of any class of the Corporation ranking prior to the Common Stock of
the Corporation with respect to either the payment of dividends or the
distribution of assets upon the liquidation, dissolution or winding up of
the Corporation, the shares of which are entitled to dividends at a rate of
less than 5% of the issue price thereof per annum, or (b) by indebtedness
for borrowed money having an effective interest cost (computed in
accordance with accepted financial practice) of less than 5% per annum.
(iii) Pro Rata Redemption. Shares of the 5% Cumulative Preferred Stock,
Series 1966, shall be redeemed as provided in Section (d) of Article IV,
and in every case of redemption of less than all of the outstanding shares
of the 5% Cumulative Preferred Stock, Series 1966, the Corporation shall
first allocate to each holder of 5% or more of the then outstanding shares
of such series the same proportion as nearly as practicable of the shares
to be redeemed as the number of shares of such series held by such holder
bears to all shares of such series then outstanding. After such
allocation, the remaining shares to be redeemed may be selected pro rata,
by lot, or otherwise, at the discretion of the Board of Directors from
among shares held by the other holders of such series.
(iv) Purchase Fund. So long as shares of the 5% Cumulative Preferred
Stock, Series 1966, shall be outstanding, the Corporation shall set aside
as a reserve on the books of the Corporation, which need not be funded, a
Purchase Fund for the 5% Cumulative Preferred Stock, Series 1966, on July
1, 1967 and on July 1 in each year thereafter, equal to the Purchase Fund
Obligation for such year as hereinafter defined; provided that the amount
so set aside shall be less than the Purchase Fund Obligation to the extent
that the purchase of shares of 5% Cumulative Preferred Stock, Series 1966,
as contemplated shall be prohibited in whole or in part at the time by
applicable law, and further provided that no amount shall be so set aside
if the Corporation is in default in the payment of dividends on the 5%
Cumulative Preferred Stock, Series 1966, or any shares of stock ranking
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senior to or on a parity with the 5% Cumulative Preferred Stock, Series
1966. The requirement for a Purchase Fund in any year shall be deemed to
be fully satisfied to the extent that the Corporation shall have set aside
a Purchase Fund, notwithstanding that the total amount expended in the
purchase of shares in such year shall be less because insufficient offers
to sell were received.
The Purchase Fund Obligation for a given year shall be $69,600 increased
by: (a) an amount equal to accrued and unpaid dividends on 6,960 shares of
5% Cumulative Preferred Stock, Series 1966, to the first date fixed for
acceptance of offers and payment for shares; (b) any balance of less than
$5,000 from the preceding year as hereinafter provided; and (c) an amount
equal to the excess, if any, of the Purchase Fund Obligation for the
immediately preceding year over the amount set aside in such immediately
preceding year.
At any time after July 1, 1967, so long as any 5% Cumulative Preferred
Stock, Series 1966, shall be outstanding, no dividend shall be paid or
declared or other distribution made on outstanding shares of stock ranking
junior with respect to either the payment of dividends or the distribution
of assets upon the liquidation, dissolution or winding up of the
Corporation to the 5% Cumulative Preferred Stock, Series 1966, nor shall
any sums be applied to the purchase, redemption or other retirement of such
junior stock unless either (a) on the immediately preceding July 1 there
has been set aside an amount equal to the Purchase Fund Obligation for such
date; or (b) subsequent to the immediately preceding July 1, a Special
Purchase Fund shall have been set aside. Such a Special Purchase Fund may
be set aside at the discretion of the Board of Directors at any time and
shall be in an amount equal to any excess of the Purchase Fund Obligation
for the immediately preceding July 1, over the amount then actually set
aside and shall otherwise be subject to the same terms and restrictions and
applied in the same manner as a Purchase Fund with the first offer to
purchase being made to each holder of shares of 5% Cumulative Preferred
Stock, Series 1966, of record at the close of business on the second
business day next succeeding the establishment of such Special Purchase
Fund.
The Purchase Fund for any given year shall be applied by the Corporation
acting for itself or through any transfer agent for the 5% Cumulative
Preferred Stock, Series 1966, or through any other duly appointed agent as
follows:
(x) If the Purchase Fund for such year shall be in an amount of less than
$5,000, it shall be dissolved and removed from the books of the Corporation
and the Purchase Fund Obligation for the following year shall be increased
by a like amount (as provided hereinabove).
(y) If the Purchase Fund for such year shall be in an amount of $5,000 or
more, the Corporation shall promptly mail to each holder of shares of 5%
Cumulative Preferred Stock, Series 1966, as such holder shall appear in the
Corporation's stock transfer records at the close of business on July 1 of
such year, an offer to purchase such shares of 5% Cumulative Preferred
Stock, Series 1966, as such holder may offer it upon the following terms
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and conditions:
(1) Subject to the limitation contained in Subparagraph (y)(3) hereof, the
Corporation shall purchase from each holder as many shares as such holder
shall offer to it on or before the close of business on July 31 of such
year and shall make payment therefor on August 1 of such year.
(2) The price at which such shares shall be purchased shall be $10 per
share plus dividends accrued and unpaid thereon to August 1 of such year.
(3) The Corporation may purchase from each holder offering shares up to
but not in excess of the number of whole shares that may be purchased with
such holder's allocable portion of the Purchase Fund determined by
multiplying the amount in the Purchase Fund by the percentage which the
number of shares so held of record by such holder represents of the total
number of shares of 5% Cumulative Preferred Stock, Series 1966, then
outstanding.
(4) Each offer to purchase shall set forth these terms and conditions and
shall also state the maximum number of shares purchasable from the holder
to whom it is addressed.
(z) If any offers have been accepted pursuant to Paragraph (y) hereof and
if any amount thereafter remains in the Purchase Fund, the Corporation
shall on or promptly after August 1 of such year mail to each holder of
record of 5% or more of the shares of 5% Cumulative Preferred Stock, Series
1966, at the close of business on August 1 of such year a second offer to
purchase such shares of 5% Cumulative Preferred Stock, Series 1966, as such
holder may offer to sell and such second offer to purchase shall be upon
the following terms and conditions:
(1) To the extent permitted by the amount remaining in the Purchase Fund,
the Corporation shall purchase as many shares as possible from those
offered to it on or before the close of business on August 31 of such year
and shall make payment therefor on September 1 of such year.
(2) The price at which such shares shall be purchased shall be $10 per
share plus dividends accrued and unpaid thereon to September 1 of such year
(the additional amount of accrued dividends to be paid form the
Corporation's general funds and not from the Purchase Fund).
(3) Should offers be received for more shares than can be purchased and
paid for with the amount then remaining in the Purchase Fund, the
Corporation shall accept such offers pro rata as nearly as possible in the
proportion that the number of shares held of record on such August 1 by
each such holder bears to the total number of such shares so held of record
by all holders offering to sell shares pursuant to this Paragraph (z)
provided that no purchase shall be made of less than a full share.
(4) Should the allocation made pursuant to Subparagraph (z)(3) to any
holder exceed the number of shares offered by such holder, such holder
shall be allocated shares to be purchased to the full amount of such
holder's offer and such excess shall be then reallocated on a similar basis
-17-
among the remaining holders who have offered shares, and this procedure
shall be repeated until no excess remains.
(5) Each such offer to purchase shall set forth the terms and conditions
and shall also state the total number of shares which can be purchased by
the total balance then in the Purchase Fund.
The Board of Directors shall have full discretion from time to time to
prescribe and regulate, subject to the provisions herein set forth, the
procedure to be followed in the surrender of certificates for shares
offered, endorsement or assignment thereof, method of payment for accepted
shares, giving of notice and any other matter not herein expressly provided
for, and may in its discretion require that offers be accompanied by the
certificates for such shares and/or by satisfactory evidence of the right
of the holder thereof to sell the same to the Corporation or may waive such
requirements. Expenses of the Purchase Fund shall be paid by the
Corporation out of its general funds and not out of the Purchase Fund.
Each Purchase Fund shall be dissolved and removed from the books of the
Corporation after all shares, if any, offered and accepted pursuant to it
have been purchased and paid for as herein contemplated.
(d) 100,000 shares of the Class A Cumulative Preferred Stock shall be
designated as 8.25% Class A Cumulative Preferred Stock, Series 1982, and
shall have the rights and preferences as follows:
(i) Dividend Rate. The rate of dividend payable on the 8.25% Class A
Cumulative Preferred Stock, Series 1982, shall be $8.25 per share per
annum, payable quarter-yearly on the first days of March, June, September
and December in each year, to shareholders of record on the respective
dates, not exceeding sixty (60) days preceding such dividend payment dates,
fixed from time to time for that purpose by the Board of Directors.
Dividends shall commence to accrue from the date of issue of such shares of
8.25% Class A Cumulative Preferred Stock, Series 1982.
(ii) Liquidation Rights. The amount to be paid to holders of the 8.25%
Class A Cumulative Preferred Stock, Series 1982, upon any involuntary
liquidation, dissolution or winding-up of the Corporation shall be $100.00
per share plus accrued dividends to the date of distribution. The amount
to be paid to holders of the 8.25% Class A Cumulative Preferred Stock,
Series 1982, upon any voluntary liquidation, dissolution or winding-up of
the Corporation shall be equal to the amount per share at which shares of
8.25% Class A Cumulative Preferred Stock, Series 1982, could then be
redeemed under the provisions of section (iii) hereof plus accrued
dividends to the date of distribution.
(iii) Redemption Price. The shares of 8.25% Class A Cumulative Preferred
Stock, Series 1982, shall be redeemable at the option of the Board of
Directors at any time or from time to time, in whole or in part, upon
payment of the following per share redemption prices:
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If redeemed If redeemed
during the during the
twelve-month twelve-month
period Redemption period Redemption
commencing Price commencing Price
December 1 Per Share December 1 Per Share
1982 $106.53 1992 $103.09
1983 106.19 1993 102.75
1984 105.84 1994 102.41
1985 105.50 1995 102.06
1986 105.16 1996 101.72
1987 104.81 1997 101.38
1988 104.47 1998 101.03
1989 104.13 1999 100.69
1990 103.78 2000 100.34
1991 103.44
and thereafter at $100.00 per share, plus, in each case, accrued dividends
to the redemption date of shares redeemed; provided, however, that no
shares of the 8.25% Class A Cumulative Preferred Stock, Series 1982, may be
redeemed at the option of the Corporation prior to December 1, 1987,
directly or indirectly, from the proceeds of, or in anticipation of, any
refunding operation involving the issuance of any bonds, notes or evidences
of indebtedness or the issuance of any shares of stock ranking prior to or
on a parity with the 8.25% Class A Cumulative Preferred Stock, Series 1982,
if such indebtedness or stock has a cost to the Corporation (calculated in
accordance with accepted financial principles) of less than 8.25% per
annum. In case of a redemption of less than all of the 8.25% Class A
Cumulative Preferred Stock, Series 1982, the particular shares to be
redeemed shall be, to the nearest full share, a proportionate part of the
holdings of each holder of shares of 8.25% Class A Cumulative Preferred
Stock, Series 1982; provided, however, that less than all of the 8.25%
Class A Cumulative Preferred Stock, Series 1982, may be redeemed only after
full cumulative dividends upon the Cumulative Preferred Shares then
outstanding shall have bee paid for all past quarter-yearly dividend
periods and after or concurrently with making payment of, or declaring and
setting apart for payment, the full dividend on all outstanding Class A
Cumulative Preferred Stock for the then current quarter-yearly dividend
period.
(iv) Sinking Fund. As and for a mandatory sinking fund for the redemption
of shares of 8.25% Class A Cumulative Preferred Stock, Series 1982, after
full cumulative dividends on the 8.25% Class A Cumulative Preferred Stock,
Series 1982, have been set aside for all past dividend periods, the
Corporation shall, on December 1 in each year commencing with December 1,
1983 to and including December 1, 2002, from any legally available funds,
redeem at the sinking fund redemption price hereinafter fixed the
applicable number of shares of 8.25% Class A Cumulative Preferred Stock,
Series 1982, as follows: 1983 through 1987, 2,000 shares; 1988 through
1992, 4,000 shares; 1993 through 1997, 6,000 shares; and 1998 through 2002,
8,000 shares. The obligation of the Corporation hereunder shall be
cumulative so that if the Corporation if prevented by any restriction in
its Article of Incorporation, as amended, or by any other reason from
redeeming the shares which it is obligated to redeem on any December 1, the
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Corporation shall set apart an amount for the mandatory sinking fund
sufficient to redeem the number of shares which the Corporation is
obligated to redeem hereunder as soon as practicable and the Corporation
shall not declare any dividend on, or make any payment or distribution in
respect of, any stock junior to the 8.25% Class A Cumulative Preferred
Stock, Series 1982, while any payment to the sinking fund shall be in
arrears. In addition to the amounts required to be set aside by this
section, the Corporation may at its option in each year, commencing with
the year 1983 to and including 2002, set aside as part of the sinking fund
a sum not exceeding the amount required in that year for the redemption of
shares of 8.25% Class A Cumulative Preferred Stock, Series 1982, which
amount shall be applied on December 1 of that year to the redemption of
additional shares of 8.25% Class A Cumulative Preferred Stock, Series 1982,
at the sinking fund redemption price; provided, however, that the right to
make such optional payments shall not be cumulative and such payments shall
not exceed $3,000,000 in the aggregate. The sinking fund redemption price
for shares of 8.25% Class A Cumulative Preferred Stock, Series 1982,
redeemed pursuant to this section (iv) shall be $100.00 per share, plus, in
each case, dividends accrued to the date of redemption.
Shares of the 8.25% Class A Cumulative Preferred Stock, Series 1982,
redeemed pursuant to mandatory or optional payments to the sinking fund
shall be called for redemption and redeemed in the manner set forth in
section (d) of Article IV. Shares of 8.25% Class A Cumulative Preferred
Stock, Series 1982, redeemed through operation of the sinking fund shall
be, to the nearest full share, a proportionate part of the holdings of each
holder of shares of 8.25% Class A Cumulative Preferred Stock, Series 1982.
In no event, however, shall any shares of 8.25% Class A Cumulative
Preferred Stock, Series 1982, be called for redemption pursuant to the
sinking fund until full dividends accrued on all outstanding shares of all
series of Class A Cumulative Preferred Stock of the Corporation shall have
been paid or declared and set apart for payment for all past quarter-yearly
dividend periods ending on or before the redemption date.
(v) No Conversion Rights. The shares of 8.25% Class A Cumulative
Preferred Stock, Series 1982, shall not be convertible into other shares or
securities of the Corporation.
(vi) Voting Rights. In addition to the voting rights conferred on all
series of Class A Cumulative Preferred Stock by subsection (2) of section
(i) of Article IV, at any meeting of shareholders of the Corporation every
holder of the 8.25% Class A Cumulative Preferred Stock shall be entitled to
cast one vote, on each matter on which shareholders of record shall be
entitled to vote, for each share of such stock standing in such holder's
name on the record books of the Corporation on the record date fixed for
the determination of stockholders entitled to vote at such meeting.
Holders of the 8.25% Class A Cumulative Preferred Stock shall vote together
with the holders of the Preferred Stock and Common Stock and not by classes
or series, except when and as may be otherwise required by law or these
Articles of Incorporation.
-20-
UNITED TELEPHONE COMPANY OF FLORIDA
Incorporated Under the Laws
of the State of Florida
September 29, 1925
BYLAWS
AS AMENDED FEBRUARY 28, 1995
CONTENTS OF BYLAWS
SECTION
Amendments to Bylaws . . . . . . . . . . . . . . . . . . . . 67 - 73
Assistant Secretary . . . . . . . . . . . . . . . . . . . . 34 & 48
Assistant Treasurer . . . . . . . . . . . . . . . . . . . . 34 & 52
Board of Directors . . . . . . . . . . . . . . . . . . . . . 12
Chairman of the Board . . . . . . . . . . . . . . . . . . . 33 & 37
Certificates of Stock . . . . . . . . . . . . . . . . . . . 61
Committees - Other . . . . . . . . . . . . . . . . . . . . . 32
Compensation of Directors . . . . . . . . . . . . . . . . . 17
Compensation of Officers . . . . . . . . . . . . . . . . . . 35
Controller . . . . . . . . . . . . . . . . . . . . . . . . 33 & 54
Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . 66
Duties of Officers - May be Delegated . . . . . . . . . . . 60
Executive Committee . . . . . . . . . . . . . . . . . . . . 28
Indemnification of Directors, Officers and Employees . . . . 73
Inspectors of Election . . . . . . . . . . . . . . . . . . . 11
Lost Certificates of Stock . . . . . . . . . . . . . . . . . 64
Meetings of Directors . . . . . . . . . . . . . . . . . . . 19
Meetings of Stockholders . . . . . . . . . . . . . . . . . . 1
Notices of Meetings of Directors . . . . . . . . . . . . . . 24
Notices of Meetings of Stockholders . . . . . . . . . . . . 4
Officers . . . . . . . . . . . . . . . . . . . . . . . . 33 - 60
Other Committees . . . . . . . . . . . . . . . . . . . . . . 32
President . . . . . . . . . . . . . . . . . . . . . . . . 33 & 38
Quorum and Conduct of Meetings of Stockholders . . . . . . . 8
Secretary . . . . . . . . . . . . . . . . . . . . . . . . 33 & 43
Stock Record . . . . . . . . . . . . . . . . . . . . . . . . 65
Transfer of Stock . . . . . . . . . . . . . . . . . . . . . 62
Treasurer . . . . . . . . . . . . . . . . . . . . . . . . 33 & 49
Vacancies . . . . . . . . . . . . . . . . . . . . . . . . 59
Vice Presidents . . . . . . . . . . . . . . . . . . . . . . 33 & 42
MEETINGS OF STOCKHOLDERS
1. The annual meeting of the stockholders shall be held at the offices of
the Corporation in Apopka, Florida, or at such other place either inside or
outside the State of Florida as may be designated in the notice of the
meeting, on such business day in the month of February of each calendar
year as is determined by the Board of Directors.
2. A special meeting of the stockholders may be called at any time by the
Board of Directors, the Executive Committee, the Chairman of the Board, or
the President; and the Chairman of the Board, President, or the Secretary
shall call a special meeting whenever requested, in writing, by five
directors, or by stockholders representing twenty-five percent of the
outstanding stock entitled to vote at such meeting. Such request shall
specify the time and object of the proposed meeting.
3. Special meetings of the stockholders shall be held at the offices of
the Corporation in Apopka, Florida, or at such other place either inside or
outside the State of Florida, as may be designated in the notice of the
meeting.
NOTICE OF MEETINGS OF STOCKHOLDERS
4. Notice of any meeting of the stockholders shall be mailed by the
Secretary not less than ten nor more than forty days before the meeting,
directed to each stockholder of record entitled to vote at such meeting at
his address as it appears on the stock record, unless the stockholder has
filed with the Secretary a written request that notices intended for him
shall be mailed to some other address in which case it shall be mailed to
the address designated in such request.
5. Notice of an annual meeting or of a special meeting shall state the
time and place and object of such meeting.
6. The failure of any stockholders to receive notice of any meeting of
stockholder shall not invalidate the meeting.
7. If amendments to the Bylaws or the Articles of Incorporation are
proposed by a stockholder, group of stockholders or the Board of Directors
for consideration by the stockholders at any annual meeting or special
meeting, the principal provisions of such proposed amendments shall be
described in said notice or attachments thereto for the stockholders
perusal prior to any annual or special meeting.
-2-
QUORUM AND CONDUCT OF MEETINGS OF STOCKHOLDERS
8. At all meetings of the stockholders, a majority in interest of the
stock entitled to vote thereat shall constitute a quorum, except where by
law a greater interest is required; but a less number may adjourn the
meeting to a day specified.
9. Each stockholder entitled to vote shall be entitled to one vote for
each share of stock standing in the name of each such stockholder on the
books of the Corporation. Any stockholder entitled to vote may vote in
person or by written proxy. Upon demand of any stockholder, the vote for
directors or vote upon any other matters before the meeting, shall be by
ballot.
10. Except as otherwise provided by law, at any duly constituted meeting,
the vote of a majority in interest of the stock represented and entitled to
vote shall be sufficient to pass any measure.
INSPECTORS OF ELECTION
11. Where demand is made at a stockholders meeting to have vote by ballot,
three inspectors of election shall be elected by ballot by the stockholders
to serve during the meeting.
BOARD OF DIRECTORS
12. The business of the Corporation shall be managed by a Board of
Directors who shall be elected by the stockholders at the annual meeting
and who shall serve until their successors are elected.
13. Vacancies in the Board may be filled by the remaining directors.
14. The number of directors shall not be less than seven nor more than
twenty-one in number.
15. Deleted April 17, 1974.
16. If the maximum number of directors are not elected at the annual
meeting, additional directors may be elected at a special meeting, provided
the notice of the meeting gives notice of such intention.
17. Directors as such shall receive no stated salaries for their services,
but by resolution of the Board of Directors, a fixed sum and expenses of
attendance may be allowed those directors not receiving regular salaries
from the Corporation, for attendance at regular and special meetings of the
Board or Executive Committee provided that nothing herein contained shall
be construed to preclude any director from representing the Corporation in
any other capacity and receiving compensation therefore.
18. No director elected by the stockholders may be removed as a director
by the Board of Directors. Any director elected by the stockholders can be
removed only by a majority vote of the outstanding common stock of the
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corporation at a special meeting of the stockholders called for such
purpose.
19. Meetings of the Board of Directors may be held at the offices of the
corporation in Apopka, Florida, or at any other place either inside or
outside the State of Florida.
20. A meeting of the Board of Directors for the election of officers and
the transaction of general business shall be held immediately following the
annual meeting of stockholders.
21. Regular meetings of the Board of Directors shall also be held at such
times and places as the Board may determine.
22. Special meetings of the Board of Directors may be called at any time
by the Chairman of the Board, or the President, and shall be called by the
Chairman of the Board, President, or by the Secretary upon request in
writing signed by two or more Directors and specifying the object of the
meeting, but special meetings, at any time or place, may be held by the
written consent and waiver of notice signed by all the Directors.
23. A majority of the Directors shall constitute a quorum, but a less
number may adjourn a meeting to any specified time and place.
NOTICE OF MEETINGS OF DIRECTORS
24. Notice of any meeting of the directors shall be sent by the Secretary
to each Director at least two days before such meeting, by mail, messenger
or telegraph, or be given personally, or by telephone.
25. Notice of a regular meeting shall state the time and place of such
meeting.
26. Notice of special meeting shall state the time, place and object of
such meeting.
27. No notice shall be necessary for the annual meeting for the election
of officers and the transaction of general business held immediately after
the annual meeting of the stockholders.
-4-
EXECUTIVE COMMITTEE
28. The Board of Directors may designate by resolution from their number
an Executive Committee of not less than three members. A majority of the
Committee shall constitute quorum.
29. Except as otherwise provided by law, such Committee shall have and
exercise all the powers of the Board of Directors in the intervals between
the meetings of the Board.
30. Minutes of all meetings of the Committee shall be kept and recorded by
the Secretary, and shall be from time to time reported to the Board of
Directors.
31. The Chairman of the Board, or President, may designate from time to
time a member of the Board of Directors to act as a member of the Executive
Committee at any time or meetings thereof in place of any member of the
Executive Committee absent therefrom.
OTHER COMMITTEES
32. The Board of Directors may designate by resolution any other committee
or committees. Such other committees shall have and shall exercise such
powers as shall be conferred upon them respectively by the Board of
Directors.
33. The Officers of the corporation shall be elected, or appointed, by the
Directors and shall consist of a President, such number of Vice Presidents
as the Directors shall from time to time determine, a Secretary, a
Treasurer and a Controller. The Directors may elect a Chairman of the
Board. The Chairman of the Board of Directors and President must be
members of the Board of Directors, but other officers elected or appointed
may or may not be members of the Board at the option of the Board of
Directors.
34. The Board of Directors may appoint one or more Assistant Secretaries,
one or more Assistant Treasurers, and such other officers and agents as the
Board may consider necessary, who shall have such powers and perform such
duties as may be assigned to them by the Board of Directors or the
Executive Committee.
35. The salaries of the officers, elected or appointed, of the Corporation
shall be fixed by the Board of Directors.
36. More than one office may be held by one and the same person.
-5-
THE CHAIRMAN
37. The Chairman of the Board of Directors shall preside at all meetings
of the stockholders and the Board of Directors at which he is present. In
the absence of the Chairman of the Board, the President shall preside.
THE PRESIDENT
38. The President shall have direct charge of and supervision over the
entire operations of the Corporation, including operational matters, as
well as financial matters, and shall be the chief executive officer of the
Corporation. He shall likewise have the responsibility of carrying out the
policies and decisions adopted by the Board of Directors or the Executive
Committee. Upon authorization of the President, the duties of the
President may be delegated to any other officer of the Corporation.
39. The President is empowered to execute deeds, bills of sale, notes,
mortgages, bonds, contracts and other instruments that require execution,
for and in behalf of the Corporation, and to sign certificates of stock.
40. The President shall have such other powers and perform such other
duties as usually appertain to the office in business corporations or as
may be delegated to him by the Board of Directors or the Executive
Committee.
41. In the absence or inability of the President, the duties of the office
shall be performed by such other officer of the Corporation as the Board of
Directors or the Executive Committee may designate.
THE VICE PRESIDENT
42. An Executive Vice President and/or one or more Vice Presidents may be
elected or appointed by the Board of Directors from time to time. Such
Vice Presidents shall be responsible to the President.
THE SECRETARY
43. The Secretary shall send all requisite notice of meetings of the
stockholders, the Board of Directors, and the Executive Committee.
44. The Secretary shall attend all meetings of the stockholders, the Board
of Directors and the Executive Committee and shall keep a true and faithful
record of the proceedings.
45. The Secretary shall have custody of the seal of the Corporation and of
all records, books, documents and papers of the Corporation, except those
required to be in the custody of the Treasurer or the Controller, and
except such subsidiary records as may be kept in departmental offices.
46. The Secretary shall sign and execute all documents which require his
signature and execution, and shall affix the seal of the Corporation
-6-
thereto and attest the same when necessary.
47. The Secretary shall have such other powers and perform such other
duties as usually appertain to the office in business corporations, or as
may be assigned to him by the Board of Directors or the Executive
Committee.
48. Any Assistant Secretary, in case of the absence or inability of the
Secretary, may exercise the powers to perform the duties of the Secretary.
The Assistant Secretaries shall have such other powers and perform such
other duties as may be assigned to them by the Board of Directors, the
Executive Committee or the Secretary.
THE TREASURER
49. The Treasurer shall receive and have charge of all funds and
securities of the Corporation; he shall deposit the funds to the credit of
the Corporation in such depositories as the Board of Directors or the
Executive Committee shall designate, and he shall disburse the same only on
written approval of the Controller or his duly authorized representative,
and under such rules and regulations as the Board of Directors or the
Executive Committee may adopt.
50. The Treasurer shall keep full and regular books showing all his
receipts and disbursements which books shall be open at all times to the
inspection of any member of the Board of Directors and he shall make such
reports as the Board of Directors or the Executive Committee may require.
51. The Treasurer shall have such other powers and perform such other
duties as usually appertain to the office in business corporations, or as
may be assigned to him by the Board of Directors or the Executive
Committee.
52. Any Assistant Treasurer shall have such powers and perform such duties
as may be assigned to him by the Board of Directors, the Executive
Committee or the Treasurer within the scope of his authority.
53. The Treasurer and any Assistant Treasurer shall give such security for
the faithful performance of his duties as the Board of Directors or the
Executive Committee may require.
-7-
THE CONTROLLER
54. The Controller shall have custody and charge of all books of account,
except those required by the Treasurer in keeping record of the work of his
office, and shall have supervision over such subsidiary accounting records
as may be kept in departmental offices.
55. The Controller shall have access to all books of account, including
the records of the Secretary and the Treasurer, for purposes of audit and
for obtaining information necessary to verify or complete the records of
his office.
56. The Controller or his duly authorized representatives shall certify to
the authorization and approval pertaining to all vouchers; and no payments
from the general cash shall be made by the Treasurer except on voucher
bearing the written approval of the Controller or his authorized
representative.
57. The Controller shall be responsible to the President and shall perform
such other duties as may be assigned to him by the Board of Directors or
the Executive Committee.
58. The Controller may designate some other person or persons to perform
such of his duties as he finds necessary to delegate in the ordinary
conduct of the business, and shall with the approval of the Board of
Directors or the Executive Committee designate some person to perform the
duties of Controller in case of his absence or inability.
VACANCIES
59. If the office of any Director, the Chairman of the Board, the
President, Vice President, the Secretary, the Treasurer, the Controller, or
any officer elected or appointed by the Board of Directors becomes vacant
by reason of death, retirement, removal or otherwise, the Directors then in
office may elect or appoint a successor or successors who shall
respectively hold office for the unexpired term in respect to which such
vacancy occurred.
DUTIES MAY BE DELEGATED
60. In case of the absence or inability of any officer, or for any other
reason that the Board of Directors may deem sufficient, the Board may
delegate the powers and duties of such office to any other officer, or any
other director, for the time being.
-8-
CERTIFICATES OF STOCK
61. The certificates of stock of the Corporation shall be numbered and
entered in the books of the Corporation as they are issued. They shall
exhibit the holders name and the number of shares, and shall be signed by
the President or a Vice President and by the Secretary or an Assistant
Secretary, and shall bear the corporate seal.
TRANSFER OF STOCK
62. Transfer of stock shall be made on the books of the Corporation only
by the person named in the certificate, or by an attorney lawfully
constituted in writing, and upon surrender of such certificates.
63. The Corporation will be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and accordingly,
shall not be bound to recognize any other claim to or interest in such
shares on the part of any other person, whether or not it shall have
express notice thereof, save as may be expressly provided by the laws of
the State of Florida.
LOST CERTIFICATES
64. Any person claiming a certificate of stock to be lost or destroyed
shall make an affidavit or affirmation to that effect, and advertise the
same in such manner as the Board of Directors may require, and shall give
the Corporation a bond of indemnity, with one or more sureties satisfactory
to the Board of Directors, in at least double the par value of the stock
represented by the certificate claimed to be lost or destroyed, whereupon a
new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to be lost or destroyed, but always subject to
the approval of the Board of Directors.
STOCK RECORD
65. A stock ledger shall be maintained showing a record of the stock
holding of each stockholder.
CORPORATE SEAL
66. The corporate seal shall have inscribed thereon: "United Telephone
Company of Florida, a Florida Corporation. Corporate Seal."
AMENDMENTS
67. The Articles of Incorporation, Article VI, provides that "The bylaws
may be adopted or amended only by a majority of all the voting stock voting
in person or by proxy."
-9-
68. Any stockholder or group of stockholders of record can propose
amendments to the Bylaws or the Articles of Incorporation by a notice in
writing to the Secretary, outlining in sufficient detail such proposed
amendments to be considered at any annual meeting of the stockholders.
Such notice must be sufficiently in advance of the annual meeting and in
the hands of the Secretary in time to comply with Sections Four and Seven
of these bylaws entitled "Notice of Meetings of Stockholders."
69. Stockholders representing twenty-five percent of the total outstanding
stock entitled to vote can propose amendments to the Bylaws or Articles of
Incorporation by a notice in writing to the Secretary outlining in
sufficient detail such proposed amendments and the request that a special
meeting of the stockholders be called in accordance with Section Two of
these Bylaws, entitled "Meetings of Stockholders."
70. Any proposals for amendments to the Bylaws or the Articles of
Incorporation can be recommended by any elected or appointed officer or the
Executive Committee, but must have approval of the Board of Directors
before being recommended by the management of the Company as a group for
consideration at any annual or special meeting of the stockholders. Any
officer who is also a stockholder, however, shall have the right as a
stockholder, to propose amendments to the Bylaws or Articles of
Incorporation at any annual meeting of the stockholders so long as Section
68 under this heading is complied with.
71. In no event shall any amendment or amendments to the Bylaws or the
Articles of Incorporation be considered valid unless proper notice of such
amendment or amendments is given to stockholders in advance of any annual
or special meeting in compliance with Sections 4, 7, 68, 69 and 70 of these
Bylaws.
72. That whenever in these Bylaws the word "stockholder" or "stockholders"
is used, it shall be construed to mean only the holder or holders of stock
entitled to vote pursuant to the Certificate of Incorporation, except,
however, as used in Bylaw Number 65 pertaining to the maintenance of a
stock ledger; and wherever in these Bylaws the word "stock" is used, it
shall be construed to mean stock possessing voting power pursuant to the
Certificate of Incorporation, except, however, as used in Bylaws Numbers
39, 61, 62, 63, 64 and 65 pertaining generally to the issuance of stock
certificates and maintenance of stock records.
73. Indemnification of Officer and Directors.
(a) Limitation of Liability.
No person shall be liable to the Corporation for
any loss or damage suffered by it on account of
any action taken or omitted to be taken by him or
her as a director or officer of the Corporation in
good faith, if such person (1) exercised or used
the same degree of care and skill as a prudent man
or woman would have exercised or used under the
circumstances in the conduct of his or her own
affairs, or (2) took or omitted to take such
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action in reliance on advice of counsel for the
Corporation or upon statements made or information
furnished by officers or employees of the
Corporation which he or she had reasonable grounds
to believe.
(b) Indemnification
(1) Actions Other Than Those by or in the Right
of the Corporation. The Corporation shall
indemnify any person who was or is a party or is
threatened to be made a party to any threatened,
pending or completed action, suit or proceeding,
whether civil, criminal, administrative or
investigative (other than an action by or in the
right of the Corporation) by reason of the fact
that he or she is or was a director or officer of
the Corporation, or is or was serving at the
request of the Corporation as a director or
officer of another corporation, partnership, joint
venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection
with such action, suit or proceeding if he or she
acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the
best interests of the Corporation (or such other
corporation or organization), and, with respect to
any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or
its equivalent, shall not, of itself, create a
presumption that the person did not act in good
faith and in a manner which he or she reasonably
believed to be in or not opposed to the best
interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable
cause to believe that his or her conduct was
unlawful.
(2) Action by or in the Right of the Corporation.
The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party
to any threatened, pending or completed action or
suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the
fact that he or she is or was a director or
officer, of the Corporation, or is or was serving
at the request of the Corporation as a director or
officer of another corporation, partnership, joint
venture, trust or other enterprise against
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expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection
with the defense or settlement of such action or
suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or
not opposed to the best interests of the
Corporation (or such other corporation or
organization) and except that no indemnification
shall be made in respect of any claim, issue or
matter as to which such person shall have been
adjudged to be liable for negligence or misconduct
in the performance of his or her duty to the
Corporation (or such other corporation or
organization) unless and only to the extent that
the court in which such action or suit was brought
shall determine upon application that, despite the
adjudication of liability but in view of all the
circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(3) Successful Defense of Action.
Notwithstanding, and without limitation of, any
other provision of this Section 73, to the extent
that a director or officer of the Corporation has
been successful on the merits or otherwise in
defense of any action, suit or proceeding referred
to in paragraph (1) or (2) of this Section 73, or
in defense of any claim, issue or matter therein,
he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
(4) Determination Required. Any indemnification
under paragraph (1) or (2) of this Section 73
(unless ordered by a court) shall be made by the
Corporation only as authorized in the specific
case upon a determination that indemnification of
the director or officer is proper in the
circumstances because he or she has met the
applicable standard of conduct set forth in said
paragraph. Such determination shall be made (i)
by the Board of Directors by a majority vote of a
quorum consisting of directors who were not
parties to the particular action, suit or
proceeding, or (ii) if a quorum is not obtainable,
or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel
in a written opinion, or (iii) by the
stockholders.
(5) Advance of Expenses. Expenses incurred in
defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in
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advance of the final disposition of such action,
suit or proceeding as authorized may be paid by
the Corporation in advance of the final
disposition of such action, suit or proceeding as
authorized by the Board of Directors in the
specific case upon receipt of a satisfactory
undertaking by or on behalf of the director or
officer to repay such amount unless it shall
ultimately be determined that he or she is
entitled to be indemnified by the Corporation as
authorized in this Section 73.
(c) Nonexclusivity; Duration.
The indemnifications, rights, and limitations of
liability provided by this Section 73 shall not be
deemed exclusive of any other indemnifications,
rights or limitations of liability to which any
person may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors,
or otherwise, either as to action in his official
capacity or as to action in another capacity while
holding office, and they shall continue although
such person has ceased to be a director or officer
and shall inure to the benefit of his or her
heirs, executors and administrators.
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