<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 1-6417
GTE CALIFORNIA INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 95-0510200
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
600 Hidden Ridge, HQE04B12 - Irving, Texas 75038
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
Registrant's telephone number, including area code 972-718-5600
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
The Company had 70,000,000 shares of $20 par value common stock outstanding at
April 30, 1998. The Company's common stock is 100% owned by GTE Corporation.
<PAGE> 2
PART I. FINANCIAL INFORMATION
GTE California Incorporated and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1997
-------- --------
(Thousands of Dollars)
<S> <C> <C>
REVENUES AND SALES
Local services $354,286 $359,625
Network access services 211,621 221,589
Toll services 77,613 117,313
Other services and sales 91,748 82,555
-------- --------
Total revenues and sales 735,268 781,082
-------- --------
OPERATING COSTS AND EXPENSES
Cost of services and sales 278,458 251,166
Selling, general and administrative 105,421 123,879
Depreciation and amortization 143,607 165,073
-------- --------
Total operating costs and expenses 527,486 540,118
-------- --------
OPERATING INCOME 207,782 240,964
OTHER EXPENSE
Interest - net 27,118 24,818
-------- --------
INCOME BEFORE INCOME TAXES 180,664 216,146
Income taxes 72,568 87,849
-------- --------
NET INCOME $108,096 $128,297
======== ========
</TABLE>
Per share data is omitted since the Company's common stock is 100% owned by GTE
Corporation (GTE).
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 3
GTE California Incorporated and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollars in Millions)
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Net income $ 108.1 $ 128.3
</TABLE>
Net income decreased 16% or $20.2 for the three months ended March 31, 1998,
compared to the same period in 1997. The three month decrease is primarily due
to lower toll revenues resulting from the effects of greater competition and
revenue reductions associated with regulatory mandates, partially offset by
customer growth in access lines and minutes of use and decreases in operating
costs and expenses.
REVENUES AND SALES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Local services $ 354.3 $ 359.6
Network access services 211.6 221.6
Toll services 77.6 117.3
Other services and sales 91.8 82.6
-------------- --------------
Total revenues and sales $ 735.3 $ 781.1
</TABLE>
Total revenues and sales decreased 6% or $45.8 for the three months ended March
31, 1998, compared to the same period in 1997.
Local service revenues decreased 1% or $5.3 for the three months ended March 31,
1998, compared to the same period in 1997. The decline is partially due to $5.7
in reduced support payments from the California High Cost Fund for providing
universal service to customers in rural areas and a $4.9 decrease relating to
the termination in 1997 of Extended Area Service transitional support payments.
Revenues from directory assistance and operator services declined by $3 and
revenues from non-recurring service charges decreased by $3.6. In addition, the
impact of the California Public Utilities Commission's (CPUC's) Implementation
Rate Design supplement, recorded in the first quarter of 1997, contributed $4.4
to the decrease. These decreases were partially offset by a 5.3% growth in
access lines which generated additional revenues of $5.9 from basic local
services, $5.8 from CentraNet(R) services and $2.8 from Integrated Services
Digital Network (ISDN) and Digital Channel Services (DCS). Revenues from
SmartCall(R) and CLASS services, such as caller ID and automatic call
return/redial, also increased by $2.7.
Network access service revenues decreased 5% or $10 for the three months ended
March 31, 1998, compared to the same period in 1997. Revenues decreased $8.6 as
a result of interstate access rate reductions from the 1997 Federal
Communications Commission (FCC) price cap. In 1997, the FCC also ordered
significant changes that altered the structure of access charges collected by
the Company. These changes, effective January 1, 1998, reduced and restructured
the per minute charges paid by long distance carriers and implemented new per
line charges. Additionally, the FCC created a structure that resulted in
different access charges for residential primary and
2
<PAGE> 4
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
secondary lines and single line and multi-line business access lines. In
aggregate, these changes resulted in an $8.2 decrease in network access service
revenues during the first quarter of 1998. A decrease of $34 resulting from the
sharing provisions of the FCC's 1996 and 1997 price caps was partially offset by
reserves of $10.3 which were established in the first quarter of 1997. The
results also reflect a $3 decline in revenues from end-user access charges and a
$4.7 decrease in revenues from intrastate sharing arrangements. These decreases
were partially offset by a 16% increase in minutes of use which generated
additional revenues of $16.8. Special access revenues, driven by growing demand
for increased bandwidth services by Internet Service Providers (ISPs) and other
high capacity users, increased by $11.7. In addition, revenues from the National
Exchange Carrier Association (NECA) increased by $13.3.
Toll service revenues decreased 34% or $39.7 for the three months ended March
31, 1998, compared to the same period in 1997. The decrease is primarily caused
by reduced toll volumes resulting from the effects of intraLATA (local access
transport area) toll competition, including 10XXX and 1+ presubscription.
Other services and sales revenues increased 11% or $9.2 for the three months
ended March 31, 1998, compared to the same period in 1997, primarily due to a
$5.2 increase associated with the FCC's order on payphone compensation and a
$3.6 increase in revenues from billing and collection services.
OPERATING COSTS AND EXPENSES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Total operating costs and expenses $ 527.5 $ 540.1
</TABLE>
Total operating costs and expenses declined 2% or $12.6 for the three months
ended March 31, 1998, compared to the same period in 1997. Depreciation expense
decreased $21.5 due to depreciation rate changes, reflecting higher net salvage
values related to certain telephone plant and equipment, that became effective
in the third quarter of 1997. Other factors contributing to the overall decrease
include $11.9 of administrative productivity gains, a $3.1 decline in access
charges incurred to terminate customers' intraLATA toll calls outside the
Company's service territory and a $9.1 reduction in employee benefit-related
expenses. These decreases were partially offset by an $11.2 rise in maintenance
and repair costs associated with storm damage within the Company's service
territories and a $13 increase in costs related to implementation of the FCC's
local number portability requirements. The decrease in total operating costs and
expenses was also partially offset by a $9.5 increase in Info Page billings from
directory publications.
OTHER EXPENSES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Interest - net $ 27.1 $ 24.8
Income taxes 72.6 87.8
</TABLE>
Interest - net increased 9% or $2.3 for the three months ended March 31, 1998,
compared to the same period in 1997, primarily due to higher average short-term
debt levels.
3
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Income taxes decreased 17% or $15.2 for the three months ended March 31, 1998,
compared to the same period in 1997, primarily due to a corresponding decrease
in pre-tax income.
CAPITAL RESOURCES AND LIQUIDITY
Management believes the Company has adequate internal and external resources
available to meet ongoing operating requirements for construction of new plant,
modernization of facilities and payment of dividends. The Company generally
funds its construction program from operations, although external financing is
available. Short-term financings can be obtained through borrowings from the
Company's parent, GTE, or GTE Funding Incorporated, an affiliate of the Company.
The Company participates with other affiliates in a $1,500, 364-day syndicated
line of credit. In December 1997, the Company began participating with GTE and
other of its affiliates in a series of five bilateral credit agreements for an
additional $2,000 in credit capacity. These facilities, which are shared by the
participating companies, are aligned with the maturity date of the existing
364-day line of credit. The Company also has an existing shelf registration
statement for an additional $400 of debentures.
The Company's primary source of funds during the first three months of 1998 was
cash from operations of $257.2 compared to $336 for the same period in 1997.
This decrease in cash from operations reflects an increase in working capital
requirements combined with a decline in results from operations.
Net cash used in investing activities was $149 for the first three months of
1998, compared to $84.1 for the same period in 1997. The increase in capital
expenditures reflects the Company's continued growth in primary and secondary
access lines and the modernization of interoffice facilities to mitigate
Internet congestion. Although the capital expenditures during the first three
months of 1998 were higher than the same period in 1997, the overall anticipated
capital expenditures for 1998 are expected to be comparable to the total capital
expenditures incurred during 1997.
Net cash used in financing activities was $112.4 for the three months ended
March 31, 1998, compared to $184.1 during the same period in 1997. This included
dividend payments of $158.4 for the first three months of 1998, compared to
$112.9 for the same period in 1997. Short-term financings, including the net
change in affiliate notes, increased $195.9 in the first quarter of 1998,
compared to a decrease of $71.1 for the same period in 1997. The Company also
retired $150 of long-term debt during the first quarter of 1998.
In its April 2, 1998 filing on Form 8-K, the Company's parent, GTE, stated that
because the MCI shareholders had accepted a competing offer, GTE's offer for MCI
was no longer outstanding. As a result, the Company and GTE were removed from
"Credit Watch" by all rating agencies. The Company believes that its present
investment grade credit rating provides ready access to the capital markets at
reasonable rates and provides the Company with the financial flexibility
necessary to pursue growth opportunities as they arise.
OTHER MATTERS
New Regulatory Framework (NRF)
Effective January 1, 1990, the CPUC adopted the NRF for the Company. Under the
NRF, rates are adjusted annually by the Price Cap Index (PCI), which is based on
inflation minus a productivity improvement factor. Rates for partially
competitive services, such as Centrex and custom calling features, may be priced
below the price cap within a range set by the CPUC. Rates are also adjusted for
exogenous events that are beyond the control of management as defined in this
plan. Fully competitive services, such as directory advertising, are not subject
to pricing limits set by the CPUC.
4
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
In March 1998, the CPUC opened an order initiating its triennial review of the
NRF. The Company expects to file comments regarding the first phase of the NRF
review in May 1998.
Competition
In January 1998, the CPUC approved the Company's petition to operate both as a
reseller and facilities-based competitive local-exchange carrier (CLC) offering
local-exchange service within the territories of mid-sized local-exchange
carriers. Authority to commence facilities-based service was effective February
1, 1998 and authority to resell services was effective April 1, 1998, upon the
filing of tariffs.
Open Access and Network Architecture Development (OANAD) Proceeding
On September 15, 1997, the Company submitted cost studies for unbundled network
elements (UNEs) and retail services to the CPUC. A final order on the Company's
UNE costs is anticipated in September 1998 and a final order on UNE prices is
anticipated in the first quarter of 1999.
In a separate phase of the OANAD proceeding, the CPUC allowed comments on
parties' Operational Support Systems (OSS) and Non-Recurring Cost (NRC) studies
which were submitted in September 1997. The Company filed a pricing proposal for
OSS and NRCs in April 1998 along with testimony regarding what constitutes a
"reasonable markup" for UNEs, arbitrage and price floor determinations. A final
order on these matters is expected in late 1998.
Other Developments
In March and April 1998, the Company took action to correct errors discovered in
certain specialty directories known as "Street Address" directories. Less than
two percent of the Company's customers with non-published, non-listed and
non-address directory listings had their information accidentally printed in the
Street Address books, which are specialty marketing directories generally used
by a limited number of California businesses on a leased basis. Once the full
scope of the errors was known, the Company took immediate action to develop and
implement a comprehensive plan to retrieve and replace the directories in
question. This included seeking and obtaining a temporary restraining order
preventing the use, copying or distribution of the these directories by any
remaining holders of these directories. Efforts were also made to contact all
customers who had requested non-published, non-listed or non-address listings,
in addition to the small percentage impacted by the errors. The financial
impact, if any, of potential CPUC or legal actions that may arise as a result of
this occurrence cannot be determined at this time.
RECENT DEVELOPMENTS
In April 1998, the Company's parent, GTE, announced a series of actions designed
to further sharpen its strategic focus and improve its competitive position by
repositioning non-strategic properties and reducing costs. GTE expects to
generate after-tax proceeds of $2,000-$3,000 by selling non-strategic or under-
performing operations, and plans to reduce annual costs by more than $500
through improved efficiencies and productivity while it continues to invest in
new high-growth opportunities. The impact of this announcement on the Company is
unknown at this time. GTE's management is currently assessing its options and,
as decisions are finalized regarding the sale of non-strategic operations and
cost reductions, the Company could be affected.
5
<PAGE> 7
GTE California Incorporated and Subsidiary
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary investments $ 5,657 $ 9,871
Receivables, less allowances of $56,921 and $65,169 692,863 699,038
Inventories and supplies 53,119 51,050
Prepaid insurance 40,289 6,529
Prepaid taxes and other 11,827 28,870
------------ ------------
Total current assets 803,755 795,358
------------ ------------
Property, plant and equipment, at cost 10,203,275 10,077,872
Accumulated depreciation (6,395,438) (6,278,551)
------------ ------------
Total property, plant and equipment, net 3,807,837 3,799,321
------------ ------------
Prepaid pension costs 738,137 706,556
Other assets 24,734 19,095
------------ ------------
Total assets $ 5,374,463 $ 5,320,330
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term obligations, including current maturities $ 277,861 $ 246,052
Accounts payable 369,783 356,322
Taxes payable 78,503 26,760
Accrued interest 20,734 30,163
Accrued payroll costs 93,004 89,221
Dividends payable 190,624 158,246
Other 251,851 258,122
------------ ------------
Total current liabilities 1,282,360 1,164,886
------------ ------------
Long-term debt 1,466,786 1,466,679
Deferred income taxes 420,612 394,883
Employee benefit plans 230,753 225,425
Other liabilities 260,801 272,648
------------ ------------
Total liabilities 3,661,312 3,524,521
------------ ------------
Shareholders' equity:
Preferred stock 49,984 49,984
Common stock (70,000,000 shares issued) 1,400,000 1,400,000
Additional paid-in capital 82,239 82,239
Retained earnings 180,928 263,586
------------ ------------
Total shareholders' equity 1,713,151 1,795,809
------------ ------------
Total liabilities and shareholders' equity $ 5,374,463 $ 5,320,330
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE> 8
GTE California Incorporated and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1998 1997
--------- ---------
(Thousands of Dollars)
<S> <C> <C>
OPERATIONS
Net income $ 108,096 $ 128,297
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 143,607 165,073
Deferred income taxes 25,165 20,222
Provision for uncollectible accounts 15,616 19,044
Changes in current assets and current liabilities (38,868) 36,601
Other - net 3,577 (33,233)
--------- ---------
Net cash from operations 257,193 336,004
--------- ---------
INVESTING
Capital expenditures (148,978) (87,933)
Proceeds from sale of assets -- 3,794
--------- ---------
Net cash used in investing (148,978) (84,139)
--------- ---------
FINANCING
Long-term debt retired (149,990) (71)
Dividends (158,376) (112,886)
Increase (decrease) in short-term obligations,
excluding current maturities 195,937 (71,111)
--------- ---------
Net cash used in financing (112,429) (184,068)
--------- ---------
Increase (decrease) in cash and cash equivalents (4,214) 67,797
Cash and cash equivalents:
Beginning of period 9,871 22,158
--------- ---------
End of period $ 5,657 $ 89,955
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
7
<PAGE> 9
GTE California Incorporated and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION:
The unaudited condensed consolidated financial statements included
herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. However, in the opinion of management of the Company, the
condensed consolidated financial statements include all adjustments,
which consist only of normal recurring accruals, necessary to present
fairly the financial information for such periods. These condensed
consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the
Company's 1997 Annual Report on Form 10-K.
Reclassifications of prior year data have been made, where appropriate,
to conform to the 1998 presentation.
(2) DEBT:
Long-term debt as of March 31, 1998 includes $200 million of short-term
borrowings in the form of affiliate notes payable which the Company
anticipates refinancing during the second quarter of 1998. These
affiliate notes payable represent notes payable to GTE Funding
Incorporated, a company that provides short-term financing and
investment vehicles and cash management services for the Company and
six of its affiliates.
(3) RECENT ACCOUNTING PRONOUNCEMENT:
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" (SOP 98-1).
SOP 98-1 defines internal-use software and establishes accounting
standards for the costs of such software. The Company is currently
assessing the impact of adopting SOP 98-1.
8
<PAGE> 10
GTE California Incorporated and Subsidiary
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K.
3.1 Amendment to Bylaws (amended April 17, 1998)
3.2 Certificate of Amendment of the Articles of Incorporation dated
March 26, 1998
3.3 Certificate of Amendment of the Articles of Incorporation dated
April 21, 1998
12 Statement re: Calculation of the Consolidated Ratio of Earnings
to Fixed Charges
27 Financial Data Schedule
(b) The Company filed no reports on Form 8-K during the first quarter of
1998.
9
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GTE California Incorporated
--------------------------------
(Registrant)
Date: May 12, 1998 Stephen L. Shore
----------------------------- --------------------------------
Stephen L. Shore
Controller
(Principal Accounting Officer)
10
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------------------ ----------------------------------------------------------------------------------------
<S> <C>
3.1 Amendment to Bylaws (amended April 17, 1998)
3.2 Certificate of Amendment of the Articles of Incorporation dated March 26, 1998
3.3 Certificate of Amendment of the Articles of Incorporation dated April 21, 1998
12 Statements re: Calculation of the Consolidated Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.1
BYLAWS
OF
GTE CALIFORNIA INCORPORATED
---------------------------
(A California Corporation)
AS IN EFFECT
APRIL 1, 1995
Amended: April 17, 1998
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. OFFICES
Section 1. Principal Executive Office....................................................1
Section 2. Other Offices.................................................................1
ARTICLE II. SHAREHOLDERS
Section 1. Place of Meetings.............................................................1
Section 2. Annual Meetings...............................................................1
Section 3. Special Meetings..............................................................1
Section 4. Notice of Annual or Special Meetings..........................................2
Section 5. Quorum........................................................................2
Section 6. Adjourned Meetings and Notice Thereof.........................................3
Section 7. Voting........................................................................3
Section 8. Record Date...................................................................5
Section 9. Consent of Absentees..........................................................6
Section 10. Action Without Meeting........................................................6
Section 11. Proxies.......................................................................6
Section 12. Inspectors of Election........................................................7
Section 13. Conduct of Meeting............................................................7
ARTICLE III. DIRECTORS
Section 1. Powers........................................................................8
Section 2. Number of Directors...........................................................8
Section 3. Election and Term of Office...................................................9
Section 4. Vacancies.....................................................................9
Section 5. Place of Meeting.............................................................10
Section 6. Regular Meetings.............................................................10
Section 7. Special Meetings.............................................................10
Section 8. Quorum.......................................................................10
Section 9. Participation in Meetings by Conference Telephone............................11
Section 10. Waiver of Notice.............................................................11
Section 11. Adjournment..................................................................11
Section 12. Fees and Compensation........................................................11
Section 13. Action Without Meeting.......................................................11
Section 14. Rights of Inspection.........................................................11
Section 15. Committees...................................................................12
ARTICLE IV. OFFICERS
Section 1. Officers.....................................................................13
Section 2. Election.....................................................................13
Section 3. Subordinate Officers.........................................................13
Section 4. Removal and Resignation......................................................13
Section 5. Vacancies....................................................................13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 6. President....................................................................13
Section 7. Vice Presidents..............................................................14
Section 8. Secretary....................................................................14
Section 9. Treasurer....................................................................14
Section 10. Controller...................................................................15
ARTICLE V. OTHER PROVISIONS
Section 1. Inspection of Corporate Records..............................................15
Section 2. Inspection of Bylaws.........................................................16
Section 3. Endorsement of Documents; Contracts..........................................16
Section 4. Certificates of Stock and Lost Certificates..................................16
Section 5. Representation of Shares of Other Corporations...............................17
Section 6. Annual Report to Shareholders................................................17
Section 7. Construction and Definitions.................................................17
ARTICLE VI. INDEMNIFICATION
Section 1. Definitions..................................................................18
Section 2. Indemnification in Actions by Third Parties..................................18
Section 3. Indemnification in Actions by or in the Right of the Corporation.............18
Section 4. Indemnification Against Expenses.............................................19
Section 5. Required Determinations......................................................19
Section 6. Advance of Expenses..........................................................19
Section 7. Other Indemnification........................................................20
Section 8. Forms of Indemnification not Permitted.......................................20
Section 9. Insurance....................................................................20
Section 10. Nonapplicability to Fiduciaries of Employee Benefit Plans....................20
ARTICLE VII. AMENDMENTS
</TABLE>
<PAGE> 4
Bylaws
(Bylaws for the regulation, except
as otherwise provided by statute or
its Articles of Incorporation)
OF
GTE CALIFORNIA INCORPORATED
(a California corporation)
ARTICLE I
OFFICES
Section 1. Principal Executive Office. The principal executive office
of the corporation is fixed and located at One GTE Place, Thousand Oaks,
California 91362-3811. The Board of Directors (herein called the "Board") is
granted full power and authority to change said principal executive office from
one location to another. Any such change shall be noted on the Bylaws opposite
this Section, or this Section may be amended to state the new location.
Section 2. Other Offices. Branch or subordinate offices may
be established at any time by the Board at any place or places.
ARTICLE II
SHAREHOLDERS
Section 1. Place of Meetings. Meetings of Shareholders shall be held
either at the principal executive office of the corporation or at any other
place within or without the State of California which may be designated either
by the Board or by the written consent of all persons entitled to vote thereat,
given either before or after the meeting and filed with the Secretary.
Section 2. Annual Meetings. The annual meetings of Shareholders shall
be held on the second Wednesday in April at 10 a.m., local time, or such other
date or such other time as may be fixed by the Board; provided, however, that
should said date fall upon a Saturday, Sunday or legal holiday observed by the
corporation at its principal executive office, then any such annual meeting of
Shareholders shall be held at the same time and place on the next day thereafter
ensuing which is a full business day. At such meetings, Directors shall be
elected and any other proper business may be transacted.
Section 3. Special Meetings. Special meetings of the Shareholders may
be called at any time by the Board, the President, or by the holders of shares
entitled to cast not less
<PAGE> 5
than ten percent of the votes at such meeting. Upon request in writing to the
President, any Vice President or the Secretary or by any person (other than the
Board) entitled to call a special meeting of Shareholders, the officer forthwith
shall cause notice to be given to the Shareholders entitled to vote that a
meeting will be held at a time requested by the person or persons calling the
meeting, not less than 35 nor more than 60 days after the receipt of the
request. If the notice is not given within 20 days after receipt of the request,
the persons entitled to call the meeting may give the notice.
Section 4. Notice of Annual or Special Meetings. Written notice of each
annual or special meeting of Shareholders shall be given not less than ten nor
more than 60 days before the date of the meeting to each Shareholder entitled to
vote thereat. Such notice shall state the place, date and hour of the meeting
and (i) in the case of a special meeting, the general nature of the business to
be transacted, and no other business may be transacted, or (ii) in the case of
the annual meeting, those matters which the Board, at the time of the mailing of
the notice, intends to present for action by the Shareholders, but, subject to
the provisions of applicable law, any proper matter may be presented at the
meeting for such action. The notice of any meeting at which Directors are to be
elected shall include the names of nominees intended at the time of the notice
to be presented by management for election.
Notice of a Shareholders' meeting shall be given either personally or
by mail or by other means of written communication, addressed to the Shareholder
at the address of such Shareholder appearing on the books of the corporation or
given by the Shareholder to the corporation for the purpose of notice; or, if no
such address appears or is given, at the place where the principal executive
office of the corporation is located or by publication at least once in a
newspaper of general circulation in the county in which the principal executive
office is located. Notice by mail shall be deemed to have been given at the time
a written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient.
Section 5. Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
Shareholders. The Shareholders present at a duly called or held meeting at which
a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough Shareholders to have less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
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Section 6. Adjourned Meetings and Notice Thereof. Any Shareholders'
meeting, whether or not a quorum is present, may be adjourned from time-to-time
by the vote of a majority of the shares, the holders of which are either present
in person or represented by proxy thereat, but in the absence of a quorum
(except as provided in Section 5 of this ARTICLE) no other business may be
transacted at such meeting.
It shall not be necessary to give any notice of the time and place of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement at the meeting at which such adjournment is taken; provided,
however, when any shareholders' meeting is adjourned for more than 45 days or,
if after adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
Section 7. Voting. The Shareholders entitled to notice of any meeting
or to vote at any such meeting shall be only persons in whose name shares stand
on the stock records of the corporation on the record date determined in
accordance with Section 8 of this ARTICLE.
Voting shall in all cases be subject to the provisions of Chapter 7 of
the California General Corporation Law, and to the following provisions:
(a) Subject to clause (g), shares held by an administrator, executor,
guardian, conservator or custodian may be voted by such holder either in person
or by proxy, without a transfer of such shares into the holder's name; and
shares standing in the name of a trustee may be voted by the trustee, either in
person or by proxy, but no trustee shall be entitled to vote shares held by such
trustee without a transfer of such shares into the trustee's name.
(b) Shares standing in the name of a receiver may be voted by such
receiver; and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into the receiver's name if authority
to do so is contained in the order of the court by which such receiver was
appointed.
(c) Subject to the provisions of Section 705 of the California General
Corporation Law and except where otherwise agreed in writing between the
parties, a Shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as
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exercisable by the minor, in person or by proxy, whether or not the corporation
has notice, actual or constructive, of the nonage, unless a guardian of the
minor's property has been appointed and written notice of such appointment given
to the corporation.
(e) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy holder as the Bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the Board of Directors of such other corporation may determine or, in the
absence of such determination, by the Chairman of the Board, President or any
Vice President of such other corporation, or by any other person authorized to
do so by the Chairman of the Board, President or any Vice President of such
other corporation. Shares which are purported to be voted or any proxy purported
to be executed in the name of a corporation (whether or not any title of the
person signing is indicated) shall be presumed to be voted or the proxy executed
in accordance with the provisions of this subdivision, unless the contrary is
shown.
(f) Shares of the corporation owned by any subsidiary shall not be
entitled to vote on any matter.
(g) Shares held by the corporation in a fiduciary capacity, and shares
of the issuing corporation held in a fiduciary capacity by any subsidiary, shall
not be entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint-tenants, tenants-in-common,
husband and wife as community property, tenants-by-the-entirety, voting
trustees, persons entitled to vote under a Shareholder voting agreement or
otherwise, or if two or more persons (including proxy holders) have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all;
(iii) If more than one vote, but the vote is evenly split on
any particular matter, each faction may vote the securities in question
proportionately.
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If the instrument so filed or the registration of the shares shows that
any such tenancy is held in unequal interests, a majority or even split for the
purpose of this Section shall be a majority or even split in interest.
Subject to the following sentence and to the provisions of Section 708
of the California General Corporation Law, every Shareholder entitled to vote at
any election of Directors may cumulate such Shareholder's votes and give one
candidate a number of votes equal to the number of Directors to be elected
multiplied by the number of votes to which the Shareholder's shares are
entitled, or distribute the Shareholder's votes on the same principle among as
many candidates as the Shareholder thinks fit. No Shareholder shall be entitled
to cumulate votes for any candidate or candidates pursuant to the preceding
sentence unless such candidate or candidates' names have been placed in
nomination prior to the voting and the Shareholder has given notice at a meeting
prior to the voting of the Shareholder's intention to cumulate the Shareholder's
votes. If any one Shareholder has given such notice, all Shareholders may
cumulate their votes for candidates in nomination.
Elections need not be by ballot; provided, however, that all elections
for Directors must be by ballot upon demand made by a Shareholder at the meeting
and before the voting begins.
In any election of Directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them up to the number of
Directors to be elected by such shares are elected.
Section 8. Record Date. The Board may fix, in advance, a record date
for the determination of the Shareholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution, or
any allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than 60 days nor less than
ten days prior to the date of the meeting nor more than 60 days prior to any
other action. When a record date is so fixed, only Shareholders of record on
that date are entitled to notice of and to vote at the meeting or to receive the
dividend, distribution, or allotment of rights, or to exercise of the rights, as
the case may be, notwithstanding any transfer of shares on the books of the
corporation after the record date. A determination of Shareholders of record
entitled to notice of or to vote at a meeting of Shareholders shall apply to any
adjournment of the meeting unless the Board fixes a new record date for the
adjourned meeting. The Board shall fix a new record date if the meeting is
adjourned for more than 45 days.
If no record date is fixed by the Board, the record date for
determining Shareholders entitled to notice of or to vote at a meeting of
Shareholders shall be at the close of business on the
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business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the next business day next preceding the day
on which the meeting is held. The record date for determining Shareholders for
any purpose other than set forth in this Section 8 or Section 10 of this ARTICLE
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto, or the 60th day prior to the date of such other
action, whichever is later.
Section 9. Consent of Absentees. The transactions of any meeting of
Shareholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Neither the business to be transacted at nor the purpose
of, any regular or special meeting of Shareholders need be specified in any
written waiver of notice, except as provided in Section 601(f) of the California
General Corporation Law.
Section 10. Action Without Meeting. Subject to Section 603 of the
California General Corporation Law, any action which, under any provision of the
California General Corporation Law, may be taken at any annual or special
meeting of Shareholders, may be taken without a meeting and without prior notice
if a consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Unless a
record date for voting purposes be fixed as provided in Section 8 of this
ARTICLE, the record date for determining Shareholders entitled to give consent
pursuant to this Section 10, when no prior action by the Board has been taken,
shall be the day on which the first written consent is given.
Section 11. Proxies. Every person entitled to vote shares has the
right to do so either in person or by one or more persons authorized by a
written proxy executed by such Shareholder and filed with the Secretary. Any
proxy duly executed is not revoked and continues in full force and effect until
revoked by the person executing it prior to the vote pursuant thereto by a
writing delivered to the corporation stating that the proxy is revoked or by a
subsequent proxy executed by the person executing the prior proxy and presented
to the meeting, or by attendance at the meeting and voting in person by the
person executing the proxy; provided, however, that no proxy shall be valid
after the expiration of eleven months from the date of its execution unless
otherwise provided in the proxy.
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Section 12. Inspectors of Election. In advance of any meeting of
Shareholders, the Board may appoint any persons other than nominees for office
Inspectors of Election to act at such meeting and any adjournment thereof. If
Inspectors of Election be not so appointed, or if any persons so appointed fail
to appear or refuse to act, the Chairman of any such meeting may, and on the
request of any Shareholder or Shareholder's proxy shall, make such appointment
at the meeting. The number of Inspectors shall be either one or three. If
appointed at a meeting on the request of one or more Shareholders or proxies,
the majority of shares present shall determine whether one or three Inspectors
are to be appointed.
The duties of such Inspectors shall be as prescribed by Section 707(b)
of the California General Corporation Law and shall include: determining the
number of shares outstanding and the voting power of each; the shares
represented at the meeting; the existence of a quorum; the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining when the polls shall close; determining the result; and doing such
acts as may be proper to conduct the election or vote with fairness to all
shareholders. If there are three inspectors of Election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all.
Section 13. Conduct of Meeting. The President or any Vice President may
preside as Chairman at all meetings of the Shareholders. The Chairman shall
conduct each such meeting in a businesslike and fair manner, but shall not be
obligated to follow any technical, formal or parliamentary rules or principles
of procedure. The Chairman's rulings on procedural matters shall be conclusive
and binding on all Shareholders, unless at the time of a ruling a request for a
vote is made to the Shareholders holding shares entitled to vote and which are
represented in person or by proxy at the meeting, in which case the decision of
a majority if such shares shall be conclusive and binding on all Shareholders.
Without limiting the generality of the foregoing, the Chairman shall have all of
the powers usually vested in the Chairman of a meeting of Shareholders.
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ARTICLE III
DIRECTORS
Section 1. Powers. Subject to limitations of the Articles, of these
Bylaws and of the California General Corporation Law relating to action required
to be approved by the Shareholders or by the outstanding shares, the business
and affairs of the corporation shall be managed and all corporate powers shall
be exercised by or under the direction of the Board. The Board may delegate the
management of the day-to-day operation of the business of the corporation to a
management company or other person provided that the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised under
the ultimate direction of the Board. Without prejudice to such general powers,
but subject to the same limitations, it is hereby expressly declared that the
Board shall have the following powers in addition to the other powers enumerated
in these Bylaws:
(a) To select and remove all the other officers, agents and
employees of the corporation, prescribe the powers and duties
for them as may not be inconsistent with law, with the
Articles or these Bylaws, fix their compensation and require
from them security for faithful service.
(b) To conduct, manage and control the affairs and business of the
corporation and to make such rules and regulations therefor
not inconsistent with law, or with the Articles or these
Bylaws, as they may deem best.
(c) To adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to alter the form of such
seal and of such certificates from time-to-time as in their
judgment they may deem best.
(d) To authorize the issuance of shares of stock of the
corporation from time-to-time, upon such terms and for such
consideration as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations
or other evidences of debt and securities therefor.
Section 2. Number of Directors. The authorized number of Directors
shall be not less than three nor more than five until changed by amendment of
the Articles or by a Bylaw duly adopted by the Shareholders. The exact number of
Directors shall be
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fixed, within the limits specified, by the Board or the Shareholders in the same
manner provided in these Bylaws for the amendment hereof. The exact number of
Directors shall be THREE (3) until changed as provided in this Section 2.
Section 3. Election and Term of Office. The Directors shall be elected
at each annual meeting of the Shareholders, but if any such annual meeting is
not held or the Directors are not elected thereat, the Directors may be elected
at any special meeting of Shareholders held for that purpose. Each Director
shall hold office until the next annual meeting and until a successor has been
elected and qualified. A nonemployee Director who shall have attained the age of
68 shall be ineligible for reelection as a Director of the corporation and no
person who shall have attained the age of 68 shall be eligible for election as a
nonemployee Director of the corporation. An employee of the corporation or any
affiliate, who may be elected a Director of the corporation, shall automatically
cease to be a Director upon his retirement or termination of his employment from
the corporation or such affiliate.
Section 4. Vacancies. Any Director may resign effective upon giving
written notice to the President, the Secretary or the Board, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be elected to take
office when the resignation becomes effective.
Vacancies in the Board, except those existing as a result of a removal
of a Director, may be filled by a majority of the remaining Directors, though
less than a quorum, or by a sole remaining Director, and each Director so
elected shall hold office until the next annual meeting and until such
Director's successor has been elected and qualified.
A vacancy or vacancies in the Board shall be deemed to exist in case of
the death, resignation or removal of any Director, or if the authorized number
of Directors be increased, or if the Shareholders fail, at any annual or special
meeting of Shareholders at which any Director or Directors are elected, to elect
the full authorized number of Directors to be voted for at that meeting.
The Board may declare vacant the office of a Director who has been
declared of unsound mind by an order of court or convicted of a felony.
The Shareholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors. Any such election by
written consent other than to fill a vacancy created by removal requires the
consent of a majority of the outstanding shares entitled to vote. Any such
election by written consent to fill a vacancy created by removal requires
unanimous consent.
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No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of the Director's term
of office.
Section 5. Place of Meeting. Regular or special meetings of the Board
shall be held at any place within or without the State of California which has
been designated from time-to-time by the Board. In the absence of such
designation, regular meetings shall be held at the principal executive office of
the corporation.
Section 6. Regular Meetings. Immediately following each annual meeting
of Shareholders the Board may hold a regular meeting for the purpose of
organization, election of officers and the transaction of other business.
Other regular meetings of the Board may be held without call on such
dates and at such times as may be fixed by the Board. Call and notice of all
regular meetings of the Board are hereby dispensed with.
Section 7. Special Meetings. Special meetings of the Board for any
purpose or purposes may be called at any time by the President or the Secretary
or by any two Directors.
Special meetings of the Board shall be held upon four days' written
notice or 48 hours' notice given personally or by telephone, telegraph, telex or
other similar means of communication. Any such notice shall be addressed or
delivered to each Director at such Director's address as it is shown upon the
records of the corporation or as may have been given to the corporation by the
Director for purposes of notice or, if such address is not shown on such records
or is not readily ascertainable, at the place in which the meetings of the
Directors are regularly held.
Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mails, postage prepaid. Any other
written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by electronic means, to
the recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone or wireless, to the recipient or to a
person at the office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient.
Section 8. Quorum. A majority of the authorized number of Directors
constitutes a quorum of the Board for the transaction of business, except to
adjourn as hereinafter provided. Every
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act or decision done or made by a majority of the Directors present at a meeting
duly held at which a quorum is present shall be regarded as the act of the
Board, unless a greater number be required by law or by the Articles. A meeting
at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of Directors, if any action taken is approved by
at least a majority of the required quorum for such meeting.
Section 9. Participation in Meetings by Conference Telephone. Members
of the Board may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another.
Section 10. Waiver of Notice. Notice of a meeting need not be given to
any Director who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such Director. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 11. Adjournment. A majority of the Directors present, whether
or not a quorum is present, may adjourn any Directors' meeting to another time
and place. Notice of the time and place of holding an adjourned meeting need not
be given to absent Directors if the time and place be fixed at the meeting
adjourned. If the meeting is adjourned for more than 24 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the Directors who were not present at the time of the
adjournment.
Section 12. Fees and Compensation. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by the Board.
Section 13. Action Without Meeting. Any action required or permitted to
be taken by the Board may be taken without a meeting if all members of the Board
shall individually or collectively consent in writing to such action. Such
consent or consents shall have the same effect as a unanimous vote of the Board
and shall be filed with the minutes of the proceedings of the Board.
Section 14. Rights of Inspection. Every Director shall have the
absolute right at any reasonable time to inspect and copy all books, records and
documents of every kind and to inspect the physical properties of the
corporation and also of its subsidiary corporations, domestic or foreign. Such
inspection by a Director may be made in person or by agent or attorney and
includes the right to copy and obtain extracts.
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Section 15. Committees. The Board may appoint one or more committees,
each consisting of two or more Directors, and delegate to such committees any of
the authority of the Board except with respect to:
(i) The approval of any action for which the
California General Corporation Law also requires
shareholders' approval or approval of the
outstanding shares;
(ii) The filling of vacancies on the Board or on any
committee;
(iii) The fixing of compensation of the Directors for
serving on the Board or on any committee;
(iv) The amendment or repeal of Bylaws or the
adoption of new Bylaws;
(v) The amendment or repeal of any resolution of the
Board which by its express terms is not so
amendable or repealable;
(vi) A distribution to the shareholders of the
corporation except at a rate or in a periodic
amount or within a price range determined by the
Board; or
(vii) The appointment of other committees of the Board
or the members thereof.
Any such committee must be designated, and the members or alternate members
thereof appointed by resolution adopted by a majority of the authorized number
of Directors and any such committee may be designated an Executive Committee or
by such other name as the Board shall specify. Alternate members of a committee
may replace any absent member at any meeting of the committee. The Board shall
have the power to prescribe the manner in which proceedings of any such
committee shall be conducted. In the absence of any such prescription, such
committee shall have the power to prescribe the manner in which its proceedings
shall be conducted. Unless the Board or such committee shall otherwise provide,
the regular and special meetings and other actions of any such committee shall
be governed by the provisions of this ARTICLE applicable to meetings and actions
of the Board. Minutes shall be kept of each meeting of each committee.
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ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the corporation shall be a
President, a Secretary and a Treasurer. The corporation may also have, at the
discretion of the Board, one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers as may be
elected or appointed in accordance with the provisions of Section 3 of this
ARTICLE.
Section 2. Election. The officers of the corporation, except such
officers as may be elected or appointed in accordance with the provisions of
Section 3 or Section 5 of this ARTICLE, shall be chosen annually by, and shall
serve at the pleasure of, the Board and shall hold their respective offices
until their resignation, removal, or other disqualification from service, or
until their respective successors shall be elected.
Section 3. Subordinate Officers. The Board may elect, and may empower
the President to appoint, such other officers as the business of the corporation
may require, each of whom shall hold office for such period, have such authority
and perform such duties as are provided in these Bylaws or as the Board may from
time-to-time determine.
Section 4. Removal and Resignation. Any officer may be removed, either
with or without cause, by the Board of Directors at any time or, except in the
case of an officer chosen by the Board, by any officer upon whom such power of
removal may be conferred by the Board. Any such removal shall be without
prejudice to the rights, if any, of the officer under any contract of employment
of the officer.
Any officer may resign at any time by giving written notice to the
corporation, but without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular election or appointment to such
office.
Section 6. President. The President is the general manager and chief
executive officer of the corporation and has, subject to the control of the
Board, general supervision, direction and control of the business and officers
of the corporation. The President may preside at all meetings of the
Shareholders. The
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President has the general powers and duties of management usually vested in
the office of president and general manager of a corporation and such other
powers and duties as may be prescribed by the Board.
Section 7. Vice Presidents. In the absence or disability of the
President, the Vice Presidents in the order of their rank as fixed by the Board
or, if not ranked, the Vice President designated by the Board, shall perform all
the duties of the President and, when so acting, shall have all the powers of,
and be subject to all the restrictions upon, the President. The Vice Presidents
shall have such other powers and perform such other duties as from time-to-time
may be prescribed for them respectively by the Board.
Section 8. Secretary. The Secretary shall keep or cause to be kept, at
the principal executive office or such other place as the Board may order, a
book of minutes of all meetings of Shareholders, the Board and its committees,
with the time and place of holding, whether regular or special, and if special,
how authorized, the notice thereof given, the names of those present at Board
and committee meetings, the number of shares present or, represented at
Shareholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the Bylaws of the corporation at the principal
executive office or business office in accordance with Section 213 of the
California General Corporation Law.
The Secretary shall give, or cause to be given, notice of all meetings
of the Shareholders and of the Board and of any committees thereof required by
these Bylaws or by law to be given, shall keep the seal of the corporation in
safe custody, and shall have such other powers and perform such other duties as
may be prescribed by the Board.
Section 9. Treasurer. The Treasurer shall send, or cause to be sent,
to the Shareholders of the corporation such financial statements and reports as
are by law or these Bylaws required to be sent to them. The Treasurer shall
keep, or cause to be kept, at the principal executive office or at the office of
the corporation's Transfer Agent or Registrar, if one be appointed, a share
register, or a duplicate share register, showing the names of the Shareholders
and their addresses, and number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board. The Treasurer shall disburse the funds of the corporation as may
be ordered by the Board, shall render to the President and the Directors,
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whenever they request it, an account of all transactions as Treasurer and shall
have such other powers and perform such other duties as may be prescribed by the
Board.
Section 10. Controller. The Controller is the chief accounting officer
of the corporation and shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation. The books of account shall at all times be open
to inspection by any Director. All bills, vouchers and other accounts payable
shall be submitted to him, and he shall audit and approve the same for payment
if found proper and correct. The Controller shall render to the President and
Directors, whenever they request it, an account of all transactions as
Controller, and of the financial condition of the corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board.
ARTICLE V
OTHER PROVISIONS
Section 1. Inspection of Corporate Records.
(a) A Shareholder or Shareholders holding at least five
percent in the aggregate of the outstanding voting
shares of the corporation or who hold at least one
percent of such voting shares and have filed a
Schedule 14B with the United States Securities and
Exchange Commission relating to the election of
Directors of the corporation shall have an absolute
right to do either or both of the following:
(i) Inspect and copy the record of Shareholders' names
and addresses and shareholdings during usual
business hours upon five business days' prior
written demand upon the corporation; or
(ii) Obtain from the Transfer Agent, if any, for the
corporation, upon five business days' prior
written demand and upon the tender of its usual
charges for such a list (the amount of which
charges shall be stated to the Shareholder by
the Transfer Agent upon request), a list of the
Shareholders' names and addresses who are
entitled to vote for the election of Directors
and their shareholdings, as of the most recent
record date for which it has been compiled or as
of a date specified by the Shareholder
subsequent to the date of demand.
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(b) The record of Shareholders shall also be open to inspection
and copying by any Shareholder or holder of a voting trust
certificate at any time during usual business hours upon
written demand on the corporation, for a purpose reasonably
related to such holder's interest as a Shareholder or holder
of a voting trust certificate.
(c) The accounting books and records and minutes of
proceedings of the Shareholders and the Board and
committees of the Board shall be open to inspection
upon written demand on the corporation of any
Shareholder or holder of a voting trust certificate at
any reasonable time during usual business hours, for a
purpose reasonably related to such holder's interests
as a Shareholder or as a holder of such voting trust
certificate.
(d) Any inspection and copying under this ARTICLE may be made in
person or by agent or attorney.
Section 2. Inspection of Bylaws. The corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended to
date, which shall be open to inspection by Shareholders at all reasonable times
during office hours. If the principal executive office of the corporation is
located outside the State of California and the corporation has no principal
business office in such state, it shall upon the written notice of any
Shareholder furnish to such Shareholder a copy of these Bylaws as amended to
date.
Section 3. Endorsement of Documents; Contracts. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance or other instrument in writing and any
assignment or endorsements thereof executed or entered into between the
corporation and any other person, when signed by the President or any Vice
President, and the Secretary or any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the corporation shall be valid and binding on the
corporation in the absence of actual knowledge on the part of the other person
that the signing officers had no authority to execute the same. Any such
instruments may be signed by any other person or persons and in such manner as
from time-to-time shall be determined by the Board, and, unless so authorized by
the Board, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or amount.
Section 4. Certificates of Stock and Lost Certificates. Every holder of
shares of the corporation shall be entitled to have a certificate signed in the
name of the corporation by the President or any Vice President, and the
Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary,
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<PAGE> 20
certifying the number of shares and the class or series of shares owned by the
Shareholder. Any or all of the signatures on the certificate may be facsimile.
If any officer, Transfer Agent or Registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, Transfer Agent or Registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if such person were an
officer, Transfer Agent or Registrar at the date of issue.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board may provide; provided, however,
that on any certificate issued to represent any partly paid shares, the total
amount of the consideration to be paid therefor and the amount paid thereon
shall be stated.
Except as provided in this Section, no new certificate for shares shall
be issued in lieu of an old one unless the latter is surrendered and cancelled
at the same time. The Board may, however, if any certificate for shares is
alleged to have been lost, stolen or destroyed, authorize the issuance of a new
certificate in lieu thereof, and the corporation may require that the
corporation be given a bond or other adequate security sufficient to indemnify
it against any claim that may be made against it (including expense or
liability) on account of the alleged loss, theft or destruction of such
certificate or the issuance of such new certificate.
Section 5. Representation of Shares of Other Corporations. The
President or any other officer or officers authorized by the Board or the
President are each authorized to vote, represent and exercise on behalf of the
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of the corporation. The authority herein
granted may be exercised either by any such officer in person or by any other
person authorized so to do by proxy or power of attorney duly executed by said
officer.
Section 6. Annual Report to Shareholders. The annual report to
Shareholders referred to in Section 1501 of the California General Corporation
Law is expressly waived, but nothing herein shall be interpreted as prohibiting
the Board from issuing annual or other periodic reports to Shareholders.
Section 7. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the General Provisions of the California Corporations Code and in
the California General Corporation Law shall govern the construction of these
Bylaws.
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ARTICLE VI
INDEMNIFICATION
Section 1. Definitions. For the purposes of this ARTICLE, "agent" means
any person who is or was a Director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a Director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes without limitation
attorneys' fees and any expenses of establishing a right to indemnification
under Sections 4 or 5(c).
Section 2. Indemnification in Actions by Third Parties. The
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any proceeding (other than an action by
or in the right of the corporation to procure a judgment in its favor) by reason
of the fact that such person is or was an agent of the corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
Section 3. Indemnification in Actions by or in the Right of the
Corporation. The corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that such person is or was an agent of the
corporation, against expenses actually and reasonably incurred by such person in
connection with the defense or settlement of such action if such person acted in
good faith, in a manner such person believed to be in the best interests of the
corporation and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances.
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<PAGE> 22
No indemnification shall be made under this Section 3:
(a) In respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to
the corporation in the performance of such person's
duty to the corporation, unless and only to the extent
that the court in which such proceeding is or was
pending shall determine upon application that, in view
of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for the
expenses which such court shall determine;
(b) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval;
or
(c) Of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval.
Section 4. Indemnification Against Expenses. To the extent that an
agent of the corporation has been successful on the merits in defense of any
proceeding referred to in Sections 2 or 3 or in defense of any claim, issue or
matter therein, the agent shall be indemnified against expenses actually and
reasonably incurred by the agent in connection therewith.
Section 5. Required Determinations. Except as provided in Section 4,
any indemnification under this ARTICLE shall be made by the corporation only if
authorized in the specific case, upon a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3, by:
(a) A majority vote of a quorum consisting of Directors who
are not parties to such proceeding;
(b) Approval of the Shareholders, with the shares owned by the
person to be indemnified not being entitled to vote thereon;
or
(c) The court in which such proceeding is or was pending upon
application made by the corporation or the agent or the
attorney or other person rendering services in connection with
the defense, whether or not such application by the agent,
attorney or other person is opposed by the corporation.
Section 6. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final disposition of
such proceeding upon receipt of an undertaking by or on behalf of the agent to
repay such amount unless it shall be determined ultimately that the agent is
entitled to be indemnified as authorized in this ARTICLE.
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<PAGE> 23
Section 7. Other Indemnification. No provision made by the corporation
to indemnify its, or its subsidiary's, Directors or officers for the defense of
any proceeding, whether contained in the Articles, Bylaws, a resolution of
Shareholders or Directors, an agreement or otherwise, shall be valid unless
consistent with this ARTICLE. Nothing contained in this ARTICLE shall affect any
right to indemnification to which persons other than such Directors and officers
may be entitled by contract or otherwise.
Section 8. Forms of Indemnification not Permitted. No indemnification
or advance shall be made under this ARTICLE, except as provided in Sections 4 or
5(c), in any circumstances where it appears:
(a) That it would be inconsistent with a provision of the
Articles, Bylaws, a resolution of the Shareholders or
an agreement in effect at the time of the accrual of the
alleged cause of action asserted in the proceeding in which
the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 9. Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not the corporation would have the
power to indemnify the agent against such liability under the provisions of this
ARTICLE.
Section 10. Nonapplicability to Fiduciaries of Employee Benefit Plans. This
ARTICLE does not apply to any proceeding against any trustee investment manager
or other fiduciary of an employee benefit plan in such person's capacity as
such, even though such person may also be an agent of the corporation as defined
in Section 1 of this ARTICLE. The corporation shall have power to indemnify such
trustee, investment manager or other fiduciary to the extent permitted by
subdivision (f) of Section 207 of the California General Corporation Law.
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ARTICLE VII
AMENDMENTS
These Bylaws may be amended or repealed either by approval of the
outstanding shares (as defined in Section 152 of the California General
Corporation Law) or by the approval of the Board; provided, however, that after
the issuance of shares, a Bylaw specifying or changing a fixed number of
Directors or the maximum or minimum number, or changing from a fixed to a
variable number of Directors, or vice versa, may only be adopted by approval of
the outstanding shares, and a bylaw reducing the fixed number or the minimum
number of Directors to a number less than five shall be subject to the
provisions of Section 212(a) of the California General Corporation Law.
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<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
GTE CALIFORNIA INCORPORATED
William G. Mundy and Charles J. Somes certify that:
1. They are the Vice President-General Counsel and the Secretary,
respectively, of GTE California Incorporated, a California corporation.
2. The Board of Directors of GTE California Incorporated has
approved a resolution providing that the Articles of Incorporation of GTE
California Incorporated shall be amended to provide for election by the
Corporation to be governed by the California Corporations Code, and that the
officers are authorized to take any and all such action as they may deem
necessary or advisable to make such amendment effective.
Pursuant to said resolutions, the Articles of Incorporation of GTE
California Incorporated shall be amended by deleting the provisions contained in
Article SECOND and inserting in lieu thereof the following:
SECOND: The purpose of the corporation is to engage in any
lawful act or activity for which a corporation may be organized under
the General Corporation Law of California other than the banking
business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
Pursuant further to said resolutions, the Articles of Incorporation of
GTE California Incorporated shall be amended by deleting the provisions
contained in Article FIFTH and inserting in lieu thereof the following:
FIFTH: The corporation elects to be governed by
the California Corporations Code as amended by the Act
of the California Legislature 1975-1976 Regular
Session, effective January 1, 1977.
3. The foregoing amendment was approved by the Board of Directors
acting alone pursuant to Section 2302 of the California Corporations Code.
<PAGE> 2
Each of the undersigned declares under penalty of perjury that the
statements contained in the foregoing Certificate of Amendment of Articles of
Incorporation are true of their own knowledge. Executed at Irving, Dallas
County, Texas, on March 31, 1998.
------------------------------
William G. Mundy
Vice President-General Counsel
------------------------------
Charles J. Somes
Secretary
STATE OF TEXAS )
)ss.:
COUNTY OF DALLAS )
William G. Mundy and Charles J. Somes being by me duly sworn, depose
and say: That they are a Vice President and the Secretary, respectively, of GTE
California Incorporated, a California corporation, and that they have read the
foregoing certificate entitled "CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION OF GTE CALIFORNIA INCORPORATED" and know the contents thereof and
that the same is true of their own knowledge.
------------------------------
------------------------------
Subscribed and sworn to before me
this 31st day of March, 1998.
Notary Public in and for said State
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<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
GTE CALIFORNIA INCORPORATED
William G. Mundy and Charles J. Somes certify that:
1. They are the Vice President-General Counsel and the Secretary,
respectively, of GTE California Incorporated, a California corporation.
2. The Board of Directors of GTE California Incorporated has
approved a resolution providing that Article SIXTH of the Articles of
Incorporation of GTE California Incorporated, shall be amended to read as
follows:
SIXTH: The corporation is authorized to issue only four (4)
classes of stock to be designated, respectively, "5% Cumulative
Preferred Stock," consisting of 1,500,000 shares; "4 1/2% Cumulative
Preferred Stock," consisting of 718,862 shares; "Cumulative Preferred
Stock, $20 Par Value," consisting of 280,312 shares; and "Common
Stock," consisting of 100,000,000 shares. The total number of shares
which the corporation shall have authority to issue is 102,499,174.
The aggregate par value of all of such shares shall be $2,049,983,480,
and the par value of each such share shall be $20. The shares of 5%
Cumulative Preferred Stock, 4 1/2% Cumulative Preferred Stock and
Cumulative Preferred Stock, $20 Par Value shall rank on a parity as to
dividends and assets. The shares of 5% Cumulative Preferred Stock and
4 1/2% Cumulative Preferred Stock shall not be issuable in series and
no distinction shall exist between any of the shares of any said
class. The shares of Cumulative Preferred Stock, $20 Par Value, may be
issued and outstanding from time to time in one or more series. The
first such series shall be designated "Cumulative Preferred Stock, $20
Par Value, 4 1/2% Series," and the authorized number of shares of said
first series shall be 280,312, all of which shares are now
outstanding. The Board of Directors of the corporation is authorized
to fix by resolution or resolutions the name or designation of each
series (other than said first series) of Cumulative Preferred Stock,
$20 Par Value, which shall include the words "Cumulative Preferred
Stock, $20 Par Value," the number of shares constituting each of said
series and the dividend rate,
<PAGE> 2
conversion rights, if any, voting rights, redemption price and
liquidation preferences of the shares of each such series.
A statement of the preferences, privileges and restrictions
granted to or imposed upon the respective classes and series of shares
and/or upon the holders thereof is as follows:
1. 5% CUMULATIVE PREFERRED STOCK:
(a) The shares of 5% Cumulative Preferred Stock shall be
entitled to receive, out of any funds of the corporation at the time
legally available for the declaration thereof, dividends at the rate
per share of five per centum (5%) per annum of the par value thereof.
Such dividends shall be payable upon such shares, when and as declared
by the Board of Directors, on January 1, April 1, July 1 and October 1
in each year (each said date being hereinafter called "dividend date").
Such dividends shall accrue on each such share from the dividend date
last preceding the date of original issuance of such share, except that
if such share shall be issued on a dividend date, then such dividends
on such share shall accrue from the date of its original issuance. Such
dividends on all shares of 5% Cumulative Preferred Stock shall be
cumulative, so that if such dividends in respect of any dividend period
at the rate fixed therefor shall not have been paid on, or declared or
set apart for, all shares of 5% Cumulative Preferred Stock at the time
outstanding, the deficiency shall be fully paid on, or declared and set
apart for, such shares before any dividends shall be paid upon, or be
declared or be set apart for, the shares of Common Stock.
(b) The corporation at any time or from time to time, upon
authority of its Board of Directors, shall have the right to redeem and
retire all or any part of the shares of 5% Cumulative Preferred Stock
by paying to or setting aside for the benefit of the holders thereof
with respect to the shares to be redeemed, a redemption price of $22
per share, together with all unpaid dividends accrued on the shares to
be redeemed to the date of redemption. Any such redemption shall be
effected upon like notice, in like manner, and with like effect with
respect to such shares as is provided in paragraph (m) of this Article
SIXTH with respect to any redemption of shares of Cumulative Preferred
Stock, $20 Par Value.
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<PAGE> 3
(c) In the event of any liquidation, dissolution or winding up
of the corporation, whether voluntary or involuntary, the shares of 5%
Cumulative Preferred Stock shall be entitled to receive out of the
assets of the corporation, whether such assets are capital or surplus,
the sum of $21 per share if such liquidation, dissolution or winding up
is voluntary, and the sum of $20 per share if such liquidation,
dissolution or winding up is involuntary, and in each case in addition
thereto an amount equal to all unpaid dividends accrued on such shares
to the date when such payments shall be made available to the holders
thereof. The full preferential amounts so payable in any such event
upon the shares of 5% Cumulative Preferred Stock shall be paid on, or
set apart for, said shares before any distribution in any such event is
paid upon, or set apart for, the shares of Common Stock.
(d) Except as otherwise provided herein or by law, no share of
5% Cumulative Preferred Stock shall be entitled to any voting rights
under any conditions or upon any matter of any kind; provided, that
whenever dividends payable on any shares of 5% Cumulative Preferred
Stock shall be in default in an amount equivalent to four full quarter
yearly dividends (whether or not consecutive) and until all dividends
in default thereon have been paid or declared and set aside for
payment, the holders of such shares shall be entitled to voting rights
on the basis of one (1) vote per share with the right to vote
cumulatively in electing directors, but upon the payment or declaration
and setting apart for payment of all such dividends in default such
voting rights shall cease; and provided further that so long as any of
such shares are outstanding and whether or not voting rights shall at
the time be vested in the holders thereof as hereinabove provided, the
corporation shall not take any action specified in any of the following
clauses (1), (2) or (3) unless the taking thereof shall have been
approved by the holders of at least a majority of the outstanding
shares of 5% Cumulative Preferred Stock, and shall not take any action
specified in clauses (2) or (3) if the taking thereof shall have been
disapproved by the holders of at least 33 1/3% of such shares, viz.:
(1) adopt an amendment to these Articles of Incorporation if such
amendment would either (i) create any class of shares preferred as to
dividends or assets over the 5% Cumulative Preferred Stock, or (ii)
change the rights and preferences of the
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<PAGE> 4
then outstanding shares of 5% Cumulative Preferred Stock; or (2) issue
any shares of 5% Cumulative Preferred Stock or of any other class of
stock over which the 5% Cumulative Preferred Stock does not have
preference as to the payment of dividends and as to assets, unless the
net income of the corporation available for the payment of dividends
for a period of twelve consecutive calendar months within the fifteen
calendar months immediately preceding such issue shall have been at
least equal to two times the annual dividend requirements of all
outstanding shares of 5% Cumulative Preferred Stock and of all such
other classes, including the shares proposed to be issued; or (3) pay
any dividends (other than dividends paid in stock over which the 5%
Cumulative Preferred Stock has preference as to payment of dividends
and as to assets) or make any other distribution of assets, by purchase
of shares or otherwise, to the holders of the shares of Common Stock or
any other class of stock over which the 5% Cumulative Preferred Stock
has such preference, except out of earned surplus or if, at the time of
declaration thereof or the making of such distribution, there shall not
remain to the credit of earned surplus account, after deducting
therefrom the amount of such dividend and distribution, an amount at
least equal to two times the annual dividend requirements of all the
shares of 5% Cumulative Preferred Stock and of all other classes of
stock over which the 5% Cumulative Preferred Stock does not have such
preference outstanding at the time of such declaration or distribution.
For the purposes of the foregoing clauses (1), (2) and (3), shares of
stock for which provision has been made for redemption, retirement or
payment, and for which purpose sufficient funds have been duly set
aside, shall not be deemed to be outstanding. Any such approval or
disapproval of the taking of any such action may be given either by
vote at a stockholders' meeting or by a writing without such a meeting,
and if the corporation shall solicit approval of the taking of any such
action without the holding of a stockholders' meeting such disapproval,
to be effective, must be given by the filing thereof with the
corporation not later than the date upon which the required written
approval thereof shall have been so filed. Nothing in this paragraph
(d) shall authorize the taking of any action specified in any of said
clauses (1), (2) or (3) upon the vote or consent of the holders of a
less number of shares of 5% Cumulative Preferred Stock, or of any other
class or classes, than is required to authorize the taking of such
action by the laws of the State of California at the time applicable
thereto.
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<PAGE> 5
2. 4 1/2% CUMULATIVE PREFERRED STOCK:
(e) The shares of 4 1/2% Cumulative Preferred Stock shall be
entitled to receive, out of any funds of the corporation at the time
legally available for the declaration thereof, dividends at the rate
per share of four and one-half per centum (4 1/2%) per annum of the par
value thereof. Such dividends shall be payable upon such shares, when
and as declared by the Board of Directors, on March 1, June 1,
September 1 and December 1 in each year (each said date being
hereinafter called "dividend date"). Such dividends shall accrue on
each such share from the dividend date last preceding the date of
original issuance of such share, except that if such share shall be
issued on a dividend date, then such dividends on such share shall
accrue from the date of its original issuance. Such dividends on all
shares of 4 1/2% Cumulative Preferred Stock shall be cumulative, so
that if such dividends in respect of any dividend period at the rate
fixed therefor shall not have been paid on, or declared or set apart
for, all shares of 4 1/2% Cumulative Preferred Stock at the time
outstanding, the deficiency shall be fully paid on, or declared and set
apart for, such shares before any dividends shall be paid upon, or be
declared or be set apart for, the shares of Common Stock.
(f) The corporation at any time or from time to time, upon
authority of its Board of Directors, shall have the right to redeem and
retire all or any part of the shares of 4 1/2% Cumulative Preferred
Stock by paying to or setting aside for the benefit of the holders
thereof with respect to the shares to be redeemed, a redemption price
of $22 per share, together with all unpaid dividends accrued on the
shares to be redeemed to the date of redemption. Any such redemption
shall be effected upon like notice, in like manner, and with like
effect with respect to such shares as is provided in paragraph (m) of
this Article SIXTH with respect to any redemption of shares of
Cumulative Preferred Stock, $20 Par Value.
(g) In the event of any liquidation, dissolution or winding up
of the corporation, whether voluntary or involuntary, the shares of 4
1/2% Cumulative Preferred Stock shall be entitled to receive out of the
assets of
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<PAGE> 6
the corporation, whether such assets are capital or surplus, the sum of
$21 per share if such liquidation, dissolution or winding up is
voluntary, and the sum of $20 per share if such liquidation,
dissolution or winding up is involuntary, and in each case in addition
thereto an amount equal to all unpaid dividends accrued on such shares
to the date when such payments shall be made available to the holders
thereof. The full preferential amounts so payable in any such event
upon the shares of 4 1/2% Cumulative Preferred Stock shall be paid on,
or set apart for, said shares before any distribution in any such event
is paid upon, or set apart for, the shares of Common Stock.
(h) Except as otherwise provided herein or by law, no share of
4 1/2% Cumulative Preferred Stock shall be entitled to any voting
rights under any conditions or upon any matter of any kind; provided,
that whenever dividends payable on any shares of 4 1/2% Cumulative
Preferred Stock shall be in default in an amount equivalent to four
full quarter yearly dividends (whether or not consecutive) and until
all dividends in default thereon have been paid or declared and set
aside for payment, the holders of such shares shall be entitled to
voting rights on the basis of one (1) vote per share with the right to
vote cumulatively in electing directors, but upon the payment or
declaration and setting apart for payment of all such dividends in
default such voting rights shall cease; and provided further that so
long as any of such shares are outstanding and whether or not voting
rights shall at the time be vested in the holders thereof as
hereinabove provided, the corporation shall not take any action
specified in any of the following clauses (1), (2) or (3) unless the
taking thereof shall have been approved by the holders of at least a
majority of the outstanding shares of 4 1/2% Cumulative Preferred Stock
or if the taking thereof shall have been disapproved by the holders of
at least 33 1/3% of such shares, viz.: (1) adopt an amendment to these
Articles of Incorporation if such amendment would either
(i) create any class of shares preferred as to dividends or assets over
the 4 1/2% Cumulative Preferred Stock, or (ii) change the rights and
preferences of the then outstanding shares of 4 1/2% Cumulative
Preferred Stock; or (2) issue any shares of 4 1/2% Cumulative Preferred
Stock or of any other class of stock over which the 4 1/2% Cumulative
Preferred Stock does not have preference as to the payment of dividends
and as to assets, unless the net income of
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<PAGE> 7
the corporation available for the payment of dividends for a period of
twelve consecutive calendar months within the fifteen calendar months
immediately preceding such issue shall have been at least equal to two
times the annual dividend requirements of all outstanding shares of 4
1/2% Cumulative Preferred Stock and of all such other classes,
including the shares proposed to be issued; or (3) pay any dividends
(other than dividends paid in stock over which the 4 1/2% Cumulative
Preferred Stock has preference as to payment of dividends and as to
assets) or make any other distribution of assets, by purchase of shares
or otherwise, to the holders of the shares of Common Stock or any other
class of stock over which the 4 1/2% Cumulative Preferred Stock has
such preference, except out of earned surplus or if, at the time of
declaration thereof or the making of such distribution, there shall not
remain to the credit of earned surplus account, after deducting
therefrom the amount of such dividend and distribution, an amount at
least equal to two times the annual dividend requirements of all the
shares of 4 1/2% Cumulative Preferred Stock and of all other classes of
stock over which the 4 1/2% Cumulative Preferred Stock does not have
such preference outstanding at the time of such declaration or
distribution. For the purposes of the foregoing clauses (1), (2) and
(3), shares of stock for which provision has been made for redemption,
retirement or payment, and for which purpose sufficient funds have been
duly set aside, shall not be deemed to be outstanding. Any such
approval or disapproval of the taking of any such action may be given
either by vote at a stockholders' meeting or by a writing without such
a meeting, and if the corporation shall solicit approval of the taking
of any such action without the holding of a stockholders' meeting such
disapproval, to be effective, must be given by the filing thereof with
the corporation not later than the date upon which the required written
approval thereof shall have been so filed. Nothing in this paragraph
(h) shall authorize the taking of any action specified in any of said
clauses (1), (2) or (3) upon the vote or consent of the holders of a
less number of shares of 4 1/2% Cumulative Preferred Stock, or of any
other class or classes, than is required to authorize the taking of
such action by the laws of the State of California at the time
applicable thereto.
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<PAGE> 8
3. CUMULATIVE PREFERRED STOCK, $20 PAR VALUE:
(i) The shares of Cumulative Preferred Stock, $20 Par Value,
of all series shall be of equal rank and priority and no distinction
shall exist between any of the shares of Cumulative Preferred Stock,
$20 Par Value, or any series thereof, except as stated in this Article
SIXTH or as to the particulars that may be fixed by the Board of
Directors of the corporation as hereinabove provided in this Article
SIXTH.
(j) The shares of Cumulative Preferred Stock, $20 Par Value, 4
1/2% Series, shall (1) be entitled to dividends as provided in
paragraph (k) of this Article SIXTH at the rate per share per annum of
four and one-half per centum (4 1/2%) of the par value of such shares,
(2) be redeemable in the manner and otherwise upon the conditions and
notice provided in paragraph (m) of this Article SIXTH by payment upon
each such share to be redeemed of a redemption price of $24 per share
if the redemption be effected on or before May 1, 1950, and $23.50 per
share if the redemption be effected thereafter, together in each case
with all unpaid dividends accrued on the redeemed shares to the date of
redemption, (3) in the event of liquidation, dissolution or winding up
of the corporation, be entitled to receive out of the assets of the
corporation, whether such assets are capital or surplus, the sum of
$22.50 per share if such liquidation, dissolution or winding up is
voluntary, and the sum of $20 per share if such liquidation,
dissolution or winding up is involuntary, and in each case in addition
thereto an amount equal to all unpaid dividends accrued on such shares
to the date when such payments shall be made available to the holders
thereof, and (4) be entitled to and shall represent full and
unrestricted voting rights on the basis of one vote per share, with the
right to cumulative voting in election of directors.
(k) The holders of the outstanding shares of the several and
respective series of Cumulative Preferred Stock, $20 Par Value, shall
be entitled to receive, out of any funds of the corporation at the time
legally available for the declaration thereof, dividends at the
respective rates for shares of said series as stated in this Article
SIXTH or as fixed by the Board of Directors by resolutions adopted
pursuant to the foregoing provisions of this Article SIXTH. Such
dividends shall be payable on the shares of each said series, when and
as declared by the Board of Directors, on February 1, May 1, August 1,
and November 1, in each
-8-
<PAGE> 9
year (each said date being hereinafter called a "dividend date"). Such
dividends shall accrue on each such share from the dividend date last
preceding the date of original issuance of such share, except that if
such share shall be issued on a dividend date, then such dividends on
such share shall accrue from its date of issue. Such dividends on all
shares of Cumulative Preferred Stock, $20 Par Value, of all series
shall be cumulative, so that if dividends in respect of any dividend
period at the respective rates fixed therefor shall not have been paid,
or declared or set apart for, all shares of Cumulative Preferred Stock,
$20 Par Value, at the time outstanding, the deficiency shall be fully
paid, or declared and set apart for such shares, before any dividend
shall be paid upon, or be declared or set apart for, the shares of
Common Stock.
(l) All preferential amounts, determined as hereinabove
provided in this Article SIXTH, which in the event of any liquidation,
dissolution or winding up of the corporation, whether voluntary or
involuntary, are payable on the shares of Cumulative Preferred Stock,
$20 Par Value, then outstanding, shall be paid in full before any
distribution on any such liquidation, dissolution or winding up is paid
upon, or set apart for, the shares of Common Stock.
(m) The corporation at any time or from time to time, upon the
authority of its Board of Directors, shall have the right to redeem and
retire all or any part of the shares of Cumulative Preferred Stock, $20
Par Value, of any one or more series at the time outstanding by paying
to or setting aside for the benefit of the holders thereof with respect
to each share redeemed the amount payable thereon by reason of such
redemption thereof. If a part only of said shares is called for
redemption, then the particular shares to be redeemed shall be selected
by lot in such manner as the Board of Directors shall approve. Notice
of the intention of the corporation to redeem said shares, or any part
thereof, specifying the date and place of such redemption, and the
shares to be redeemed, if less than all of said outstanding shares are
to be redeemed, shall be published once in a newspaper of general
circulation in Los Angeles, California, not less than thirty (30) days
before the redemption date, and a similar notice shall be mailed not
less than thirty (30) days before the redemption date to the record
holders of the shares to be redeemed at their addresses as the same
appear upon the records of the corporation;
-9-
<PAGE> 10
provided, however, that accidental failure to mail any such notice to
any of such holders shall not affect the validity of such redemption if
notice shall be published as aforesaid; provided, further, that if, on
or prior to the redemption date, the corporation shall deposit with a
bank or trust company (which shall have a capital and surplus of at
least $5,000,000) in California as a trust fund, a sum sufficient to
redeem the shares called for redemption with irrevocable instructions
and authority to such bank or trust company to publish the notice of
redemption thereof and to pay on or after the redemption date, to the
respective holders of such shares, the redemption price thereof under
surrender of their certificates for the shares to be redeemed, then
from and after the date of such deposit (although prior to the date of
redemption) such shares shall be deemed to be redeemed, and redemption
thereof shall be deemed to have been effected, and dividends thereon
shall cease to accrue after said redemption date and said shares shall
no longer be deemed to be outstanding and the holders thereof shall
cease to be shareholders with respect to such shares and shall have no
rights with respect thereto except only the right to receive from said
bank or trust company payment of the redemption price of such shares
without interest, upon surrender of their certificates therefor, and
any right to convert said shares which may exist and then continue for
any period fixed by resolution of the Board of Directors pursuant to
this Article SIXTH.
(n) So long as any shares of Cumulative Preferred Stock, $20
Par Value, of any one or more series are outstanding the corporation
shall not without the consent, given by vote at a shareholders' meeting
or in writing without a meeting, of the holders of at least a majority
of all said outstanding shares issue or sell any stock of the
corporation having a preference as to dividends or upon liquidation
over the shares of Cumulative Preferred Stock, $20 Par Value.
(o) The corporation shall have no power to purchase any share
or shares of Cumulative Preferred Stock, $20 Par Value, while any
quarterly dividend or dividends are in arrears on any such stock,
unless the policy of purchasing shares of such stock under such
circumstances shall first have been approved or authorized by the
holders of at least two-thirds of the outstanding shares of such stock,
either in writing or by vote at a stockholders' meeting, and after any
such
-10-
<PAGE> 11
approval or authorization the corporation shall be empowered, subject
to any applicable provision of laws then in effect, to purchase shares
of such stock to the extent and for the period provided in any such
approval or authorization.
4. COMMON STOCK
(p) Each holder of shares of Common Stock of the corporation
shall have the preemptive right and privilege to subscribe for and
purchase such number of shares of Common Stock, or of securities
convertible into or evidencing the right to purchase shares of Common
Stock, at any time issued by the corporation as bears the same ratio to
the total number or amount of shares or securities then proposed to be
issued as the number of shares of Common Stock held by such shareholder
shall bear to the number of shares of Common Stock outstanding
immediately prior to such additional issue. Subject to said preemptive
right and privilege of the holders of shares of Common Stock, no holder
of shares of stock of any class of the corporation shall have any
preemptive or preferential right of subscription or purchase with
respect to any unissued shares of any class of stock, whether now or
hereafter authorized, of the corporation, but, subject to said
preemptive right and privilege of the holders of shares of Common
Stock, any and all shares of capital stock of any class, whether now or
hereafter authorized, may be issued and disposed of from time to time
in such manner and to such persons, whether stockholders or not, as may
be determined by the Board of Directors, without first being offered to
stockholders.
(q) Every share of Common Stock shall be entitled to the same
right as every other share of Common Stock in all distributions of
earnings and assets of the corporation distributable to holders of
Common Stock. Every share of Common Stock of the corporation shall be
entitled to voting rights on the basis of one (1) vote per share with
the right to vote cumulatively in electing directors.
3. The foregoing amendment was approved by the required vote
of the shareholders of said corporation in accordance with Section 903
of the California Corporations Code; the total number of outstanding
shares of each class entitled to vote with respect to the foregoing
amendments was 70,000,000 shares of Common Stock and 280,312 shares of
-11-
<PAGE> 12
Cumulative Preferred Stock, $20 Par Value; and the number of shares of
each class voting in favor of the foregoing amendments equalled or
exceeded the vote required, such required vote being a majority of the
outstanding shares of Common Stock and Cumulative Preferred Stock, $20
Par Value and a majority of the outstanding shares of Common Stock
voting as a class. No shares of 7.48% Cumulative Preferred Stock are
outstanding. No shares of 8.375% Cumulative Preferred Stock are
outstanding.
Each of the undersigned declares under penalty of perjury that the
statements contained in the foregoing Certificate of Amendment of Articles of
Incorporation are true of their own knowledge. Executed at Irving, Dallas
County, Texas, on April 17, 1998.
------------------------------
William G. Mundy
Vice President-General Counsel
------------------------------
Charles J. Somes
Secretary
STATE OF TEXAS )
)ss.:
COUNTY OF DALLAS )
William G. Mundy and Charles J. Somes being by me duly sworn, depose
and say: That they are a vice president and the secretary, respectively, of GTE
California Incorporated, a California corporation, and that they have read the
foregoing certificate entitled "CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION OF GTE CALIFORNIA INCORPORATED" and know the contents thereof and
that the same is true of their own knowledge.
------------------------------
------------------------------
Subscribed and sworn to before me
this 17th day of April, 1998.
- -----------------------------------
Notary Public in and for said State
-12-
<PAGE> 1
Exhibit 12
GTE California Incorporated and Subsidiary
STATEMENT OF THE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three
Months Ended
March 31, 1998
--------------
<S> <C>
Net earnings available for fixed charges:
Income continuing operations $108,096
Add - Income taxes 72,568
- Fixed charges 34,779
--------
Adjusted earnings $215,443
========
Fixed charges:
Interest expense $ 30,741
Portion of rent expense representing interest 4,038
--------
Adjusted fixed charges $ 34,779
========
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES 6.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,657
<SECURITIES> 0
<RECEIVABLES> 749,784
<ALLOWANCES> 56,921
<INVENTORY> 53,119
<CURRENT-ASSETS> 803,755
<PP&E> 10,203,275
<DEPRECIATION> 6,395,438
<TOTAL-ASSETS> 5,374,463
<CURRENT-LIABILITIES> 1,282,360
<BONDS> 1,466,786
1,400,000
0
<COMMON> 49,984
<OTHER-SE> 263,167
<TOTAL-LIABILITY-AND-EQUITY> 5,374,463
<SALES> 735,268
<TOTAL-REVENUES> 753,268
<CGS> 278,458
<TOTAL-COSTS> 527,486
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,118
<INCOME-PRETAX> 180,664
<INCOME-TAX> 72,568
<INCOME-CONTINUING> 108,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,096
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
