<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 1995
------------------------------------------------------------
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- 3090
---------------------------------------------------------
GTE FLORIDA INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-0397520
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I. R. S. Employer
Incorporation or organization) Identification No.)
600 Hidden Ridge, HQE04B12 - Irving, Texas 75038
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 214-718-5600
------------------------------
- --------------------------------------------------------------------------------
(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 23,400,000 shares of $25 par value common stock outstanding at
September 30, 1995. The Company's common stock is 100% owned by GTE
Corporation.
<PAGE> 2
PART I. FINANCIAL INFORMATION
GTE FLORIDA INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
1995 1994 1995 1994
--------- --------- ---------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating revenues:
Local network services $ 154,488 $ 143,724 $ 461,467 $ 434,050
Network access services 110,779 100,854 336,104 320,624
Long distance services 20,487 19,626 62,112 60,796
Equipment sales and services 27,624 26,183 82,528 75,425
Other 25,447 27,109 70,207 71,546
--------- --------- ---------- ---------
338,825 317,496 1,012,418 962,441
--------- --------- ---------- ---------
Operating expenses:
Cost of sales and services 146,959 141,941 408,278 415,841
Depreciation and amortization 75,271 69,704 216,680 201,112
Selling, general and administrative 48,548 48,166 138,567 148,186
--------- --------- ---------- ---------
270,778 259,811 763,525 765,139
--------- --------- ---------- ---------
Net operating income 68,047 57,685 248,893 197,302
--------- --------- ---------- ---------
Interest expense - net 16,423 14,849 48,022 45,596
--------- --------- ---------- ---------
Income before income taxes 51,624 42,836 200,871 151,706
Income taxes 19,850 15,886 75,950 56,169
--------- --------- ---------- ---------
Net income $ 31,774 $ 26,950 $ 124,921 $ 95,537
========= ========= ========== =========
</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 FLORIDA 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 Nine Months Ended
September 30, September 30,
----------------------- ------------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $31.8 $27.0 $124.9 $95.5
</TABLE>
Net income increased 18% or $4.8 and 31% or $29.4 for the three and nine months
ended September 30, 1995, respectively, compared to the same periods in 1994.
These increases are primarily due to higher operating revenues resulting from
continued customer growth, partially offset by increased depreciation expense.
The nine month increase is also due to lower operating expenses related to
decreased labor and benefit costs and data processing charges.
OPERATING REVENUES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ --------------------------
1995 1994 1995 1994
------- ------- --------- --------
<S> <C> <C> <C> <C>
Local network services $ 154.5 $ 143.7 $ 461.5 $ 434.1
Network access services 110.8 100.9 336.1 320.6
Long distance services 20.5 19.6 62.1 60.8
Equipment sales & services 27.6 26.2 82.5 75.4
Other 25.4 27.1 70.2 71.5
------- ------- -------- -------
Total operating revenues $ 338.8 $ 317.5 $1,012.4 $ 962.4
</TABLE>
Operating revenues increased 7% or $21.3 and 5% or $50.0 for the three and nine
months ended September 30, 1995, respectively, compared to the same periods in
1994.
Local network services revenues increased 8% or $10.8 and 6% or $27.4 for the
three and nine months ended September 30, 1995, respectively, compared to the
same periods in 1994. The number of access lines increased 4% for the three
and nine months ended September 30, 1995, compared to the same periods in 1994.
This growth generated additional revenues of $3.5 and $10.8, respectively. The
three and nine month increases are also due to a growth of $1.5 and $4.6 in
revenues from enhanced custom calling features, a growth of $1.7 and $3.0 in
revenues from operator services, a growth of $0.6 and $2.5 in private line
revenue and a growth of $1.2 and $4.2 in revenues from Integrated Services
Digital Network (ISDN), a service that permits rapid transmission of voice,
data, image and text over one phone line.
Network access services revenues increased 10% or $9.9 and 5% or $15.5 for the
three and nine months ended September 30, 1995, respectively, compared to the
same periods in 1994. The three and nine month increases are primarily due to
a 7% increase in minutes of use, which generated additional revenues of $5.3
and $18.8, respectively. The three and nine month increases are also due to
the net effect of the May and August 1995 interstate
2
<PAGE> 4
GTE FLORIDA INCORPORATED AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
rate changes that resulted in additional revenues of $5.8 and $8.3 associated
with the FCC Price Cap, as mentioned in Other Matters, partially offset by $3.4
and $10.6 of lower interstate access revenues associated with the affiliate
audit price reductions. The nine month increase is also partially offset by
$4.6 of unfavorable interstate access settlements.
Long distance services increased 5% or $0.9 and 2% or $1.3 for the three and
nine months ended September 30, 1995, respectively, compared to the same
periods in 1994. The three and nine month increases are primarily due to a
$0.7 and $1.2 growth in Business Line 800 services.
Equipment sales and services revenues increased 5% or $1.4 and 9% or $7.1 for
the three and nine months ended September 30, 1995, respectively, compared to
the same periods in 1994. The three and nine month increases are primarily due
to a $1.3 and $3.7 increase in revenues derived from sales of Personal
Secretary voice messaging services. The nine month increase is also due to a
$2.5 growth in Radio Paging.
Other operating revenues decreased 6% or $1.7 and 2% or $1.3 for the three and
nine months ended September 30, 1995, respectively, compared to the same
periods in 1994. These decreases are primarily due to a $1.8 and $4.1 increase
in the provision for uncollectibles. The nine month decrease is partially
offset by a $1.9 increase in cellular operator services and a $0.9 growth in
DataBase 800 services.
OPERATING EXPENSES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
1995 1994 1995 1994
------ ------- ------ ------
<S> <C> <C> <C> <C>
Operating expenses $270.8 $259.8 $763.5 $765.1
</TABLE>
Operating expenses increased $11.0 for the three months and decreased $1.6 for
the nine months ended September 30, 1995, compared to the same periods in 1994.
The three month increase is primarily due to increased depreciation costs of
$5.6, a $10.5 increase in digital switching software fees, a $4.1 increase in
operating taxes and $1.4 of higher charges associated with uncollectible
interexchange carrier receivables. These increases are partially offset by a
$3.8 decrease in material purchases, a $1.7 decrease in charges related to
unbillable calling card calls and $5.9 in nonrecurring unfavorable settlement
activities recorded in the third quarter of 1994.
The year-to-date decrease is primarily due to lower cost of sales and services
and selling, general and administrative costs, reflecting the favorable effects
of ongoing cost-reduction programs from process re-engineering activities,
partially offset by higher depreciation costs. The year-to-date decrease is
primarily due to a $12.1 decrease in data processing charges, a $4.6 decrease
in labor and benefit costs, a $4.1 decrease in charges related to unbillable
calling card calls and a $5.5 settlement gain recorded in the second quarter of
1995 which resulted from lump-sum payments from the Company's pension plans.
The nine month decrease is also due to $7.9 in nonrecurring unfavorable
settlement activities recorded in the second and third quarters of 1994. These
decreases are partially offset by a $15.6 increase in depreciation costs,
primarily related to higher plant balances and other non-recurring adjustments,
a $4.1 increase in operating taxes, a $2.3 increase in rental costs and $2.6 of
higher charges associated with uncollectible interexchange carrier receivables.
Also offsetting the nine month decrease is $6.1 of higher digital switching
software fees and a $1.6 increase in advertising costs.
3
<PAGE> 5
GTE FLORIDA INCORPORATED AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
OTHER DEDUCTIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
1995 1994 1995 1994
------ ------ ------ -------
<S> <C> <C> <C> <C>
Interest expense - net $16.4 $14.8 $48.0 $45.6
Income taxes 19.9 15.9 76.0 56.2
</TABLE>
Interest expense - net increased 11% or $1.6 and 5% or $2.4 for the three and
nine months ended September 30, 1995, respectively, compared to the same
periods in 1994. The three and nine month increases are primarily due to
higher average commercial paper borrowings, accompanied by higher short-term
borrowing rates.
Income taxes increased 25% or $4.0 and 35% or $19.8 for the three and nine
months ended September 30, 1995, respectively, compared to the same periods in
1994. These increases are primarily due to corresponding increases in pretax
income.
CAPITAL RESOURCES AND LIQUIDITY
Management believes that 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 borrowings can be obtained through
commercial paper borrowings or borrowings from GTE. In addition, at
September 30, 1995, a $3,490 line of credit was available to the Company
through shared lines of credit with GTE and other affiliates to support
short-term financing needs.
The Company's primary source of funds during the first nine months of 1995 was
cash from operations of $333.5 compared to $356.3 for the same period in 1994.
The year-to-year decrease in cash from operations is primarily the result of an
increase in working capital, partially offset by improved results from
operations. Cash from operations is also being utilized to fund the Company's
re-engineering plan.
The Company's capital expenditures during the first nine months of 1995 were
$198.6 compared to $167.8 for the same period in 1994. The 1995 expenditures
reflect the Company's continued growth in access lines and modernization of
current facilities and introduction of new products and services, including
Video Connect (service mark) services (an interactive and broadcast video
product utilized in the broadcast, educational and business markets), broadband
digital services and switched digital services. In 1995, construction costs
are expected to increase from $274.0 of capital expenditures incurred during
1994, reflecting the Company's expanding network and the replacement of
outdated technologies with digital switches and fiber optic networks.
Cash used in financing activities was $135.4 during the first nine months of
1995 compared to $193.2 for the same period in 1994. This included dividend
payments of $117.6 in the first nine months of 1995 compared to $46.6 for the
same period in 1994 and a reduction in short-term debt of $53.6 and $136.7 in
the first nine months of 1995 and 1994, respectively. The Company retired
$19.6 of long-term debt during the first nine months of 1995 compared to $0.4
for the same period in 1994. In May 1995, the Company received a capital
contribution of $50.0 from GTE to improve the Company's financial position. In
October 1995, the Company issued $100.0 of 7 1/4% Debentures, due 2025, to
reduce short-term debt and fund future capital expenditures.
4
<PAGE> 6
GTE FLORIDA INCORPORATED AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
OTHER MATTERS
As previously reported, results for 1993 included a one-time pretax
restructuring charge of $194.3, which reduced net income by $119.7, primarily
for incremental costs related to implementation of the Company's three year
re-engineering plan. The re-engineering plan will redesign and streamline
processes to improve customer-responsiveness and product quality, reduce the
time necessary to introduce new products and services and further reduce costs.
Implementation of the re-engineering plan began during 1994 and is expected to
be completed by the end of 1996. Expenditures of $80.1 have been made since
inception of the re-engineering plan, including $36.6 during the first nine
months of 1995. These expenditures were primarily associated with the
consolidation of customer contact, network operations and operator service
centers, separation benefits associated with workforce reductions and
incremental expenditures to redesign and streamline processes. There have been
no significant changes made to the overall re- engineering plan as originally
reported. As of September 30, 1995, $114.2 remains in the restructuring
reserve which management believes is adequate to cover future expenditures.
In March 1995, the Federal Communications Commission (FCC) adopted interim
rules to be utilized by local exchange carriers (LECs), including the Company,
for their 1995 Annual Price Cap Filing. The interim rules allowed LECs to
select from three productivity/sharing options for each tariff entity. Each of
the three options reflected an increase to the 3.3% productivity factor used
since 1991. The Company selected a 4.0% productivity factor for use in the
1995- 1996 tariff year. The Company must share with customers 50% of returns
over a 12.25% ROR and up to a 13.25% ROR, and share with customers 100% of
returns over a 13.25% ROR. Since the Company's access fees are priced
significantly below the FCC's maximum price, the Company was permitted to file
tariffs effective May 24, 1995 to increase rates $30.2, annually. In addition,
the Company filed tariffs effective August 1, 1995 under the interim rules to
reduce rates $13.4, annually. On September 20, 1995, the FCC released its
proposed rulemaking proceeding on price caps which proposes specific changes to
reflect and encourage emerging competition in local and access services markets
and to establish the path towards decreased regulation of local exchange
carriers' services. On September 27, 1995, the FCC solicited comments on a
number of specific issues regarding methods for establishing the price caps,
such as productivity measurements, sharing, the common line formula, and
exogenous costs. The Company anticipates the FCC will issue an order prior to
the July 1996 annual filing.
Federal telecommunications legislation has been passed by both the Senate and
House of Representatives. The bills must now be reconciled by the joint
Senate/House conference committee.
In April 1995, GTE filed a motion with the U.S. District Court for the District
of Columbia to remove the 1984 Consent Decree, which restricts the manner in
which the Company can provide interLATA services. GTE believes that the
Consent Decree is no longer required since GTE has since divested its interests
in the entities whose purchase gave rise to the Consent Decree.
In May 1995, the FCC approved GTE's applications to construct a new fiber optic
and coaxial-cable video network in four markets, including Pasco and Pinellas
Counties, Florida. GTE expects to submit tariffs that set the rates for use of
its video network to the FCC for approval. Construction was initiated in the
third quarter of 1995 with full deployment occurring over the next two to three
years.
On January 21, 1993, the Florida Public Service Commission (FPSC) issued an
order effective January 6, 1993 to reduce rates $14.5. This order established
a midpoint return on equity of 12.2% for 1993 and beyond for all state
ratemaking purposes. The Company filed a motion for reconsideration of the
rate order and the FPSC lowered the rate
5
<PAGE> 7
GTE FLORIDA INCORPORATED AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
reduction by $0.8. The Company filed an appeal of various aspects of the
FPSC's rate case decision with the Florida Supreme Court. Oral arguments were
heard by the Court on January 31, 1994. On July 7, 1994, the Court issued its
opinion accepting the Company's argument that the Commission should not have
made a $4.8 adjustment for expenses associated with affiliate transactions and
remanded this issue to the Commission. On April 3, 1995, the Commission
approved a $4.8 increase to certain local rates, effective May 2, 1995.
However, the FPSC did not approve a surcharge to recover lost revenues of
approximately $11.0 for the period that the wrongful decision was in effect.
On May 25, 1995, the Company filed an appeal of the surcharge issue with the
Florida Supreme Court. Briefs were filed with the Supreme Court on August 3,
1995. Oral arguments are scheduled for December 5, 1995. An expected decision
date is unknown at this time.
On February 13, 1995, the FPSC ordered implementation of intraLATA 1+
presubscription which will allow customers to choose their primary carrier for
short haul toll calls. Currently, the local phone company carries all short
haul toll calls when the customer dials one plus the called number. In the
future, the customer will be able to choose the local phone company, or other
company, to carry these calls. The Company is required to complete all
necessary system changes to implement the order by the end of 1997. The
Company is entitled to recover the implementation costs over three years via a
separate LEC-specific rate applied to all origination interLATA access minutes
of use. Tariffs were filed on June 27, 1995, but have been suspended until a
decision is issued on the appeal and motion for stay explained below.
Quarterly progress reports are required to monitor costs and recovery. If the
Company fully recovers its costs before the end of three years, it must file a
tariff eliminating the rate element. Any over-recovery is to be returned to
the interexchange carriers (IXCs) within three months of full cost recovery.
The Company filed an appeal and motion for stay with the Florida Supreme Court
on August 31, 1995 regarding this order. The Florida Supreme Court issued a
ruling on October 10, 1995, suspending the proceedings pending outcome of GTE's
filing with the U. S. District Court for the District of Columbia requesting
lifting of the 1984 Consent Decree.
Effective July 1, 1995, the Florida Legislature passed a bill which replaces
earnings regulation with price regulation and opens the local exchange to
competition. The Company will become subject to price regulation effective
either January 1, 1996, or when an alternative LEC is certified to provide
local service in the Company's territory, whichever is later. It is
anticipated that alternative LECs will begin the certification process in the
near future, thus making the Company subject to price regulation on January 1,
1996. Under the price regulation provisions, basic service, multi-line
business local exchange service and intrastate access rates are capped for
three years, until January 1, 1999. Basic service rates can continue to be
capped for an additional two years if the level of competition does not justify
elimination of the cap. Subsequent to the price cap period, prices for basic
services can be increased by an inflation factor (measured by GDP-PI) less 1%
annually. Rates for non-basic services, defined as services other than basic,
interconnection and network access, can increase by up to 6% per year if no
competition exists and up to 20% if there is more than one certified provider
of the service. Additionally, intrastate access rates that are higher than
interstate access rates must be reduced by at least 5% annually until parity
with 1994 interstate rates is attained. The estimated impact to the Company is
$3.5 annually. Other provisions of this legislation include the following:
(1) interconnection prices, terms and conditions will be negotiated between the
companies, with the FPSC to resolve the matter if an agreement cannot be
reached; (2) LECs must unbundle services to the extent that it is technically
and economically feasible; (3) LECs retain carrier of last resort
responsibility until January 1, 2000; (4) lifeline funding, which is designed
to support low income customers, is required, of which the Company is expected
to fund approximately $3.0 annually; (5) a temporary number portability
solution must be implemented by January 1, 1996; and (6) LECs subject to price
regulation are allowed to set their own depreciation rates.
6
<PAGE> 8
GTE FLORIDA INCORPORATED AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
REGULATORY ACCOUNTING
The Company follows the accounting for regulated enterprises prescribed by
Statement of Financial Accounting Standards No. 71, "Accounting for the Effects
of Certain Types of Regulation" (FAS 71). In general, FAS 71 requires
companies to depreciate plant and equipment over lives approved by regulators
which may extend beyond the assets' actual economic life. FAS 71 also requires
deferral of certain costs based upon approvals received from regulators to
recover such costs in the future. Consequently, the carrying value of certain
assets and liabilities, primarily telephone plant and equipment, may be greater
than that which would otherwise be recorded by unregulated enterprises.
In connection with an ongoing review of the continued applicability of FAS 71,
the Company has commenced a study of the economic lives of its telephone plant
and equipment. The study is expected to be completed by the end of the fourth
quarter of 1995. If the Company were to discontinue the application of FAS 71
and compute the effect on its telephone plant and equipment in a manner similar
to the seven Regional Bell Operating Companies which have discontinued FAS 71,
the after-tax charge resulting from the reduction in carrying value of the
Company's property, plant and equipment, which would be non-cash in nature, is
estimated to be between $300 and $400. This potential accounting charge will
have no effect on the Company's customers or its liquidity and capital
resources. Management expects that such a charge, which would be recorded
primarily as a reduction of the net book value of the fixed assets of the
Company, would not significantly affect depreciation expense on existing plant
and equipment in the near future.
7
<PAGE> 9
GTE FLORIDA INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
-------------- --------------
(Thousands of Dollars)
<S> <C> <C>
Current assets:
Cash $ 10,041 $ 10,527
Accounts and notes receivable, less allowances of
$22,556 and $19,737, respectively 273,794 301,231
Materials and supplies 19,244 15,713
Prepayments and other 14,906 19,365
----------- -----------
Total current assets 317,985 346,836
----------- -----------
Property, plant and equipment:
Original cost 3,929,385 3,781,735
Accumulated depreciation (1,393,813) (1,229,633)
----------- -----------
Net property, plant and equipment 2,535,572 2,552,102
----------- -----------
Prepaid pension costs 87,930 63,224
----------- -----------
Other assets 29,279 28,093
----------- -----------
Total assets $ 2,970,766 $ 2,990,255
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
8
<PAGE> 10
GTE FLORIDA INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Thousands of Dollars)
<S> <C> <C>
Current liabilities:
Short-term debt, including current maturities $ 71,195 $ 137,508
Accounts payable 82,985 117,191
Accrued taxes 44,674 32,073
Accrued payroll and vacations 42,572 40,466
Accrued interest 14,859 8,911
Accrued dividends 33,180 43,669
Accrued restructuring costs and other 109,169 94,224
---------- ----------
Total current liabilities 398,634 474,042
---------- ----------
Long-term debt 724,123 729,754
---------- ----------
Reserves and deferred credits:
Deferred income taxes 397,903 381,035
Employee benefit obligations 106,517 75,762
Restructuring costs and other 77,376 131,303
---------- ----------
Total reserves and deferred credits 581,796 588,100
---------- ----------
Shareholders' equity:
Preferred stock 60,096 60,096
Common stock 585,000 585,000
Other capital (Note 2) 50,289 289
Reinvested earnings 570,828 552,974
---------- ----------
Total shareholders' equity 1,266,213 1,198,359
---------- ----------
Total liabilities and shareholders' equity $2,970,766 $2,990,255
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
9
<PAGE> 11
GTE FLORIDA INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------
1995 1994
--------- ---------
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 124,921 $ 95,537
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 216,680 201,112
Deferred income taxes 25,116 23,544
Provision for uncollectible accounts 18,914 15,585
Changes in current assets and current liabilities (50,262) 23,581
Other - net (1,885) (3,087)
---------- ----------
Net cash from operating activities 333,484 356,272
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (198,609) (167,759)
---------- ----------
Cash used in investing activities (198,609) (167,759)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt retired (19,590) (399)
Dividends paid to shareholders (117,556) (46,604)
Capital contribution from GTE 50,000 - -
Net change in affiliate notes 5,385 (9,468)
Decrease in short-term debt (53,600) (136,698)
---------- ----------
Net cash used in financing activities (135,361) (193,169)
---------- ----------
Decrease in cash (486) (4,656)
Cash at beginning of period 10,527 6,688
---------- ----------
Cash at end of period $ 10,041 $ 2,032
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
10
<PAGE> 12
GTE FLORIDA INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(1) 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 1994
Annual Report on Form 10-K.
(2) On May 26, 1995, the Company received from GTE an infusion of $50.0 in
the form of additional paid-in capital to improve the Company's financial
position.
(3) In October 1995, the Company issued $100.0 of 7 1/4% Debentures, due
2025. The net proceeds from the sale of the Debentures, exclusive of accrued
interest, will be applied toward the repayment of short-term borrowings
incurred for the purpose of financing the Company's construction program and
fund future capital expenditures. As of September 30, 1995, the Company had
$63.7 of outstanding commercial paper. In accordance with Statement of
Financial Accounting Standards No. 6 "Classification of Short-Term Obligations
Expected to Be Refinanced", the condensed consolidated balance sheet as of
September 30, 1995 reflects this commercial paper as long-term debt.
(4) The Company follows the accounting for regulated enterprises prescribed
by Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation" (FAS 71). In general, FAS 71 requires
companies to depreciate plant and equipment over lives approved by regulators
which may extend beyond the assets' actual economic life. FAS 71 also requires
deferral of certain costs based upon approvals received from regulators to
recover such costs in the future. Consequently, the carrying value of certain
assets and liabilities, primarily telephone plant and equipment, may be greater
than that which would otherwise be recorded by unregulated enterprises.
In connection with an ongoing review of the continued applicability of FAS 71,
the Company has commenced a study of the economic lives of its telephone plant
and equipment. The study is expected to be completed by the end of the fourth
quarter of 1995. If the Company were to discontinue the application of FAS 71
and compute the effect on its telephone plant and equipment in a manner similar
to the seven Regional Bell Operating Companies which have discontinued FAS 71,
the after-tax charge resulting from the reduction in carrying value of the
Company's property, plant and equipment, which would be non-cash in nature, is
estimated to be between $300 and $400. This potential accounting charge will
have no effect on the Company's customers or its liquidity and capital
resources. Management expects that such a charge, which would be recorded
primarily as a reduction of the net book value of the fixed assets of the
Company, would not significantly affect depreciation expense on existing plant
and equipment in the near future.
(5) Reclassifications of prior year data have been made in the financial
statements where appropriate to conform to the 1995 presentation.
11
<PAGE> 13
GTE FLORIDA 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) Amended Articles of Incorporation (Exhibit 3-1 of the
September 30, 1995 Form 10-Q, File No. 1-3090).
(3-2) Amended By-Laws (Exhibit 3-2 of the September 30,
1995 Form 10-Q, File No. 1-3090).
(12) Statement of Consolidated Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule.
(b) GTE Florida Incorporated filed a report on Form 8-K dated
September 28, 1995 on October 2, 1995, under Item 5 "Other
Events". No financial statements were filed with this report.
The Company also filed a report on Form 8-K dated October 11,
1995 under Item 7 "Financial Statements and Exhibits", which
included computations of the Company's consolidated ratios of
earnings to fixed charges.
12
<PAGE> 14
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 hereunto duly authorized.
GTE FLORIDA INCORPORATED
------------------------
(Registrant)
Date: October 31, 1995 William M. Edwards, III
----------------------- -------------------------------
William M. Edwards, III
Controller
(Chief Accounting Officer)
13
<PAGE> 15
INDEX TO EXHIBITS
Exhibit
No. Description
------- -----------
(3-1) Amended Articles of Incorporation (Exhibit 3-1 of the
September 30, 1995 Form 10-Q, File No. 1-3090).
(3-2) Amended By-Laws (Exhibit 3-2 of the September 30,
1995 Form 10-Q, File No. 1-3090).
(12) Statement of Consolidated Ratio of Earnings to Fixed
Charges.
(27) Financial Data Schedule.
14
<PAGE> 1
Exhibit 3-1
ARTICLES OF AMENDMENT
OF
GTE FLORIDA INCORPORATED
(BY VOTE OF SHAREHOLDERS)
Pursuant to Section 607.1006 of the Florida Business Corporation Act,
the undersigned corporation adopts these Articles of Amendment.
First: The name of the corporation is GTE Florida Incorporated.
Second: The Restated Articles of Incorporation of this corporation
are amended by changing Article VI, paragraph one, so that, as amended, said
Article shall read as follows:
The business of this corporation shall be conducted by a Board of not
less than three (3) directors having a quorum of no less than
one-third of the prescribed number of directors, elected annually by
the stockholders of this corporation by a majority of the votes cast
at such election, to serve until the next succeeding annual election
of directors by the stockholders.
Third: The Amendment to the Restated Articles of Incorporation of the
corporation set forth above was adopted on the 15th day of September, 1995.
Fourth: The Amendment was approved by the shareholders. The number
of votes cast for the amendment by the shareholders was sufficient for
approval.
Signed this 15th day of September, 1995.
GTE FLORIDA INCORPORATED
By: Charles J. Somes, Secretary
------------------------------
Charles J. Somes, Secretary
<PAGE> 1
Exhibit 3-2
BYLAWS OF
GTE FLORIDA INCORPORATED
---------------
INCORPORATED UNDER THE LAWS
OF THE STATE OF FLORIDA
(1901)
Adopted: October 24, 1974
Amended: March 23, 1978
July 28, 1983
February 27, 1986
March 4, 1993
September 15, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
Definitions
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Offices
Section 2. Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Meeting of Stockholders
Section 4. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Notice of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Notice of Adjourned Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 11. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 12. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 13. Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 14. Action by Shareholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
Board of Directors
Section 15. General Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 16. Number, Election, Term of Office, Eligibility,
and Provisions for Automatic Termination
of Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 17. First Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 18. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 19. Special, Regular and Telephonic Meetings--
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 20. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 21. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 22. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 23. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 24. Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 25. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 26. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 27. Executive or Special Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 28. Action by Directors Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
Officers
Section 29. Appointment, Term of Office, and
Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 30. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 31. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 32. Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 33. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 34. The President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 35. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 36. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 37. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 38. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 39. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 40. Controller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 41. Assistant Controllers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 42. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
Execution of Instruments, etc.
Section 43. Contracts, etc., How Executed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 44. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 45. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 46. Checks, Drafts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 47. Sale or Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII
Shares and Their Transfer
Section 48. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 49. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 50. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 51. Lost and Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 52. Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 53. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 54. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII
Miscellaneous
Section 55. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 56. Reserve for Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 57. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 58. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 59. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
Amendments
Section 60. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 5
GTE FLORIDA INCORPORATED
BYLAWS
ARTICLE I
Definitions
Section 1. Definitions. In these Bylaws, and for all purposes hereof,
unless there be something in the subject or context inconsistent therewith:
(a) "Charter" shall mean the Certificate of Incorporation of the
Corporation as from time to time amended.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) Whenever reference is made to a stockholder or stockholders
attending or being present at a meeting, such reference shall be deemed to
include a stockholder or stockholders present or attending in person or by
proxy appointed by instrument in writing and subscribed by such stockholder or
stockholders or by his or their attorney or attorneys thereunto authorized;
and, whenever reference is made to voting or other action by any stockholder at
or in connection with any such meeting, such reference shall be deemed to
include voting or taking such action in person or by such proxy.
(d) All references herein to Articles or Sections are to the
corresponding Articles and Sections of these Bylaws; and the words "herein,"
"hereof," "hereby," and "hereunder" and other equivalent words, refer to these
Bylaws and not to any particular subdivision hereof.
<PAGE> 6
ARTICLE II
Offices
Section 2. Principal Office. The principal office of the Corporation
shall be located in Tampa, Florida.
Section 3. Other Offices. The Corporation also may have offices at
such other places within the State of Florida as the Board may from time to
time determine or the business of the Corporation may require.
ARTICLE III
Meeting of Stockholders
Section 4. Annual Meeting. The annual meeting of stockholders shall be
held on such date as the Board of Directors may designate each year within or
without the State of Florida, at such location and hour as may be specified in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 5. Notice of Meeting. A notice of the annual meeting stating
the purpose or purposes of the meeting and the place, day, and hour it will be
held shall be delivered not less than ten nor more than sixty days before the
date of the meeting, either personally or by mail, to each stockholder of
record entitled to vote at such meeting. The notice shall be signed by the
Secretary,
<PAGE> 7
an Assistant Secretary, or such other officer or person as may be designated by
the Board. Such signature may be manual signature, a facsimile signature, or a
printed signature.
Section 6. Special Meetings. A special meeting of stockholders may be
called at any time by resolution of the Board or by such other persons as may
be authorized by law.
Section 7. Notice of Special Meetings. A notice of the special meeting
stating the purpose or purposes of the meeting and the place, day, and hour it
will be held shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. The notice shall be
signed by the Secretary, an Assistant Secretary, or such other officer or
person as may be designated by the Board. Such signature may be a manual
signature, a facsimile signature, or a printed signature.
Section 8. Place of Meetings. All meetings of the stockholders shall
be held at the principal office of the Corporation in the State of Florida, or
at such other place within or without the State of Florida as shall be
specified in the notice of the meeting.
<PAGE> 8
Section 9. Notice of Adjourned Meetings. No notice of an adjourned
meeting of stockholders need be given unless expressly required by statute.
Section 10. Quorum. Except as otherwise provided by statute or by the
Charter, at each meeting of stockholders, the holders of record of a majority
in number of the issued and outstanding shares of the Corporation having voting
power, shall be present to constitute a quorum for the transaction of business.
Whether or not there is a quorum at any meeting, the stockholders present and
entitled to cast a majority of the votes thereat may adjourn the meeting from
time to time. At any such adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Shares of its own capital stock belonging to the Corporation shall not be
deemed issued and outstanding shares for the purpose of determining the
presence of a quorum at any meeting of stockholders.
Section 11. Organization. At every meeting of the stockholders, except
as otherwise voted by the Board, the President, or, in his absence, the ranking
Vice President present, or, if neither the President nor any Vice President be
present, a chairman chosen by the stockholders present and entitled to cast a
majority of the votes thereat, shall act as chairman. The Secretary of the
Corporation shall act as secretary of each meeting of the
<PAGE> 9
stockholders. In the absence at any such meeting of the Secretary, the
chairman of such meeting shall appoint an Assistant Secretary or, if none be
present, some other person to act as secretary of the meeting.
Section 12. Voting. Except as otherwise provided in the Charter, every
stockholder of record present shall be entitled at every meeting of the
stockholders to one (1) vote for every share of voting stock standing in his
name on the books of the Corporation,
(a) at the record time fixed by the Board, or
(b) if no such record time shall have been fixed, then at the
date and time of the meeting as fixed in the notice or waiver of notice
pursuant to which such meeting is held.
Voting shall be by ballot whenever any qualified voter shall demand that
any vote be by ballot. Each ballot shall be signed by the stockholder voting,
and shall state the number of shares voted thereby.
Shares of its own capital stock belonging to the Corporation shall not be
voted upon directly or indirectly.
Except as otherwise provided by law or by the Charter or by this Section or
Section 24., all matters which shall properly come before any meeting of
stockholders shall be decided by the vote of stockholders present and entitled
to cast a majority of the votes thereat, a quorum being present. A stock vote
upon any question shall be taken upon a demand therefor by any stockholder
present and entitled to vote.
<PAGE> 10
Section 13. Ratification. When stockholders who hold four-fifths of the
voting stock having the right and entitled to vote at any meeting shall be
present at such meeting, however called or notified, and shall sign a written
consent thereto on the record of the meeting, the acts of such meeting shall be
valid as if legally called and notified.
Section 14. Action by Shareholders Without a Meeting. Unless otherwise
provided in the Articles of Incorporation, action required or permitted to be
taken at an annual or special meeting of shareholders may be taken without a
meeting, without prior notice, and without a vote if the action is taken by the
holders of outstanding stock of each voting group entitled to vote thereon
having not less than the minimum number of votes with respect to each voting
group that would be necessary to authorize or take such action at a meeting at
which all voting groups and shares entitled to vote thereon were present and
voted. In order to be effective the action must be evidenced by one or more
written consents describing the action taken, dated and signed by approving
shareholders having the requisite number of votes of each voting group entitled
to vote thereon, and delivered to the Corporation by delivery to its principal
office in this state, its principal place of business, the corporate secretary,
or another officer or agent of the Corporation having custody of the book in
which proceedings of meetings of shareholders are recorded. No written consent
shall be effective to take the corporate action referred to therein unless,
within sixty days of the date of the earliest dated consent
<PAGE> 11
delivered in the manner required by this Section, written consents signed by
the number of holders required to take action are delivered to the Corporation
by delivery as set forth in this Section.
ARTICLE IV
Board of Directors
Section 15. General Powers. The business of the Corporation, except as
otherwise expressly provided by law or by the Charter, shall be managed by the
Board.
Section 16. Number, Election, Term of Office, Eligibility, and
Provisions for Automatic Termination of Membership. Directors shall be elected
at the annual meeting of stockholders. The number of directors shall be fixed
at each annual meeting of stockholders at which a Board is elected, but the
number so fixed may be fixed at a different amount within the limits prescribed
by the Charter, at any special meeting of stockholders, or by the affirmative
vote of a majority of the whole Board given at any meeting of the Board, if, in
either case, notice of the proposed change in number is included in the notice
of the meeting.
Any officer of the Corporation or of any subsidiary or affiliate who may,
after November 1, 1974, be elected as a director of the Corporation shall
automatically cease to be a director of the
<PAGE> 12
Corporation upon his retirement or termination of his employment for any reason
as an employee of the Corporation or such subsidiary or affiliate.
Section 17. First Meetings. The newly elected Board may meet
immediately after the adjournment of the Annual Meeting of Stockholders, for
the purpose of organization or otherwise, and no notice of such meeting shall
be necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present, or they may meet at such time and
place as may be fixed by the written consent of all of the directors or as
specified in notice in the manner provided for calling special meetings of the
Board.
Section 18. Place of Meetings. The Board may hold its meetings at such
time and place, within or without the State of Florida, as the Board from time
to time may determine, or as may be designated in notice of meeting or a waiver
thereof signed by all the directors; or in the absence thereof meetings may be
held anywhere at any time if all directors are present; except that the first
meeting of each Board shall be held as provided in Section 17..
Section 19. Special, Regular and Telephonic Meetings--Notices. Special
meetings of the Board may be called by the President, Secretary, or Assistant
Secretary on two (2) days' notice to each director either written, personal, by
mail, or telegram; special meetings shall be called by the President,
Secretary, or Assistant
<PAGE> 13
Secretary in like manner and on like notice on the written request of two
directors.
Regular meetings of the Board of Directors may be held at such places and
at such times as the Board shall from time to time by resolution determine. If
any day fixed for a regular meeting shall be a legal holiday at the place where
the meeting is to be held, then the meeting which would otherwise be held on
that day shall be held on the next succeeding business day not a legal holiday.
Notices of regular meetings need not be given.
The Board of Directors may permit any or all directors to participate in a
regular or special meeting by, or conduct the meeting through the use of, any
means of communication by which all directors participating may simultaneously
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
Section 20. Quorum. A majority of the directors shall constitute a
quorum for the transaction of business unless a greater number is required by
law or by the Certificate of Incorporation. The act of a majority of the
directors present at any meeting at which a quorum is present shall be the act
of the Board, unless the act of a greater number is required by statute or by
the Certificate of Incorporation. If a quorum shall not be present at any
meeting of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
<PAGE> 14
Section 21. Waiver of Notice. Attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where a director
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
Board need be specified in the notice or waiver of notice of such meeting.
Section 22. Organization. At every meeting of the Board, except as
otherwise voted by the Board, a chairman designated by the Board shall preside.
The Secretary of the Corporation shall act as secretary of meetings of the
Board. In the absence of the Secretary at any meeting of the Board, the
chairman of such meeting shall appoint an Assistant Secretary, or if none is
present, some other person to act as Secretary of the meeting.
Section 23. Resignations. Any director may resign at any time by giving
written notice to the President or to the Secretary of the Corporation or to
the Board. Such resignation shall take effect at the time specified therein
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 24. Removal of Directors. Any director may be removed, either
with or without cause, at any time, by the affirmative vote of the holders of a
majority in interest of the outstanding stock
<PAGE> 15
of the Corporation having voting power for the election of directors, at a
special meeting of the stockholders called for that purpose.
Section 25. Vacancies. Except as otherwise provided by statute or by
the Charter, any vacancy in the Board arising at any time from any cause,
including the failure of the stockholders to elect a full Board or an increase
in the number of directors, may be filled by the vote of a majority of the
directors remaining in office; or any such vacancy may be filled by the
stockholders entitled to vote upon an election of directors, at any special
meeting of stockholders at which such vacancy was created, or at a special
meeting of stockholders called for the purpose of filling such vacancy. The
directors so appointed or elected shall hold office until the next annual
election and until their successors have been duly elected and qualified.
Section 26. Fees. Unless otherwise provided in the Charter, the Board
shall have the authority to fix the compensation of directors for services in
any capacity.
Section 27. Executive or Special Committees. The Board, by resolution,
may designate two or more directors to constitute Executive or Special
Committees, which committees, having a quorum of one-third, to the extent
provided in such resolution, shall have and exercise all of the authority of
the Board in the management of the Corporation, except as otherwise required by
laws. Vacancies
<PAGE> 16
in the membership of the committees shall be filled by the Board at a regular
or special meeting of the Board or by unanimous consent resolutions of the
Board. The Executive or Special Committees shall keep regular minutes of their
proceedings and report the same to the Board when required.
Section 28. Action by Directors Without a Meeting. Unless the Articles
of Incorporation or Bylaws provide otherwise, action required or permitted to
be taken at a Board of Directors' meeting or committee meeting may be taken
without a meeting if the action is taken by all members of the Board or of the
committee. The action must be evidenced by one or more written consents
describing the action taken and signed by each director or committee member.
Action taken under this Section is effective when the last director signs
the consent, unless the consent specifies a different effective date.
A consent signed under this Section has the effect of a meeting vote and
may be described as such in any document.
ARTICLE V
Officers
Section 29. Appointment, Term of Office, and Qualifications. The Board
shall choose annually a President of the Corporation, a Secretary, a Treasurer,
and a Controller and may also elect one or more Vice Presidents, and any other
officers of the Corporation whose appointment shall not be delegated as
hereinafter in
<PAGE> 17
Section 30. provided. Each of such officers shall (except such as may be
appointed under Section 30.) hold office until the next annual election and
until a successor is chosen and qualified. Any two of said offices, except
those of President and Vice President, or President and Secretary, may be held,
and the duties thereof may be performed, by one person. No person may hold
more than two of said offices. No instrument required to be signed by more
than one officer shall be signed by the same individual in more than one
capacity.
Section 30. Other Officers. The Board may elect, or the President of
the Corporation may appoint, such other officers or agents as the Board or
President may deem necessary or advisable, including one or more Assistant
Treasurers, one or more Assistant Secretaries, and one or more Assistant
Controllers, each of whom shall hold office for such period, have such powers
and perform such duties as are provided by these Bylaws or as the Board or the
President of the Corporation may from time to time determine. Any officer, if
required to do so by the Board, shall give bond for the faithful discharge of
his duty, in such sum and with such surety or sureties as the Board shall
require.
Section 31. Removal. Any officer may be removed, either with or without
cause, at any time, by resolution adopted by a majority of the whole Board, at
any meeting of the Board, or by the President of the Corporation if such
officer shall have been appointed by him, or by any officer upon whom such
power of removal has been
<PAGE> 18
conferred by resolution adopted by a majority of the whole Board.
Section 32. Resignations. Any officer may resign at any time by giving
written notice to the President of the Corporation or to the Secretary or to
the Board. Any such resignation shall take effect at the time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 33. Vacancies. A vacancy in any office arising from any cause
shall be filled for the unexpired portion of the term in the manner prescribed
in these Bylaws for regular appointment to such office.
Section 34. The President. The President shall have general supervision
of the business of the Corporation, and over its several officers, subject,
however, to the control of the Board. He shall, when present, preside at all
meetings of the stockholders.
He may, unless otherwise directed by the Board, attend in person or by
substitute or proxy appointed by him and act and vote in behalf of the
Corporation at all meetings of the stockholders of any corporation in which
this Corporation holds stock.
He shall, whenever it may in his opinion be necessary, prescribe the duties
of officers and employees of the Corporation whose duties are not otherwise
defined.
<PAGE> 19
He may sign and execute, in the name of the Corporation, deeds, mortgages,
bonds, contracts, or other instruments authorized by the Board, except where
required or permitted by law to be otherwise signed and executed and except in
cases where the signing and execution thereof shall be expressly delegated by
the Board to some other officer or agent of the Corporation.
Section 35. Vice Presidents. In the absence or disability of the
President, the ranking Vice President available to act shall perform all the
duties of the President, and, when so acting, shall have all the powers of the
President. Any Vice President may sign and execute, in the name of the
Corporation, deeds, mortgages, bonds, and contracts for the purchase or sale of
property, both real and personal, for the construction of buildings or
telephone plant, for the purchase and installation of telephone equipment, or
other instruments authorized by the Board, except in cases where the signing
and execution thereof shall be expressly delegated by the Board to some other
officer or agent of the Corporation, and shall perform such other duties as
from time to time may be assigned to him by the Board or by the President of
the Corporation.
If at any time there be more than one Vice President, the order of rank of
such Vice Presidents shall be as determined by the Board, or in the absence of
such determination, shall be the order in which such Vice Presidents were
elected or appointed as such.
Section 36. Secretary. The Secretary shall...
<PAGE> 20
(a) keep the minutes of all meetings of the stockholders and of
the Board, in books to be kept for the purpose;
(b) see that all notices are duly given in accordance with these
Bylaws or as required by law;
(c) be custodian of the records (other than financial) and have
charge of the seal of the Corporation and see that it is used upon all papers
or documents whose execution in behalf of the Corporation under its seal is
required by law or duly authorized in accordance with these Bylaws;
(d) have charge of and keep or cause to be properly kept and
filed the stock books of the Corporation as provided by law and in Section 50.
and all other books, reports, statements, certificates, and all other documents
and records required by law;
(a) in general, perform all duties, incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board or by the President of the Corporation.
Section 37. Assistant Secretaries. At the request of the Secretary or
in his absence or disability, an Assistant Secretary designated by the Board or
the President of the Corporation shall perform all the duties of the Secretary
and, when so acting, shall have all the powers of the Secretary. Each
Assistant Secretary shall perform such other duties as from time to time may be
assigned to him by the Secretary or by the Board or by the President of the
Corporation.
<PAGE> 21
Section 38. Treasurer. The Treasurer shall...
(a) have charge and custody of, and be responsible for, all
funds and securities of the Corporation and deposit all such funds in the name
of the Corporation in such depositories as shall be selected in accordance with
provisions of Section 45.;
(b) receive, and give receipt for, moneys due and payable to the
Corporation from any source whatsoever and, subject to the direction of the
Board or the President of the Corporation, pay out and supervise the
disbursement of moneys of the Corporation;
(c) keep full and accurate books of account, showing all cash
receipts and disbursements of the Corporation, and furnish to the Controller
periodical reports of all such receipts and disbursements;
(d) render a statement of the cash account of the Corporation
whenever called upon to do so by the Board or by the President of the
Corporation or by the Controller;
(e) in general, perform all the duties incident to the office of
Treasurer, and such other duties as from time to time may be assigned to him by
the Board or by the President of the Corporation.
Section 39. Assistant Treasurers. At the request of the Treasurer, or
in his absence or disability, an Assistant Treasurer designated by the Board or
the President of the Corporation shall perform all the duties of the Treasurer,
and when so acting, shall have all the powers of the Treasurer. Each Assistant
Treasurer
<PAGE> 22
shall perform such other duties as from time to time may be assigned to him by
the Treasurer or by the Board or by the President of the Corporation.
Section 40. Controller. The Controller shall be the Principal
accounting officer of the Corporation. The Controller shall...
(a) keep or cause to be kept full and complete books of account
of all operations of the Corporation and of its assets and liabilities;
(b) exhibit at all reasonable times his books of account and
records to any of the directors of the Corporation upon application during
business hours at the office of the Corporation where such books and records
are kept;
(c) render reports of the operations and business and of the
conditions of the finances of the Corporation at all regular meetings of the
Board, if called upon to do so, and at such other times as may be requested by
the Board or by any director, or by the President of the Corporation and render
a full financial report at the annual meeting of the stockholders, if called
upon to do so;
(d) receive periodical reports from the Treasurer of all
receipts and disbursements and see that correct vouchers are taken for all
disbursements for any purpose;
(e) in general, perform all the duties incident to the office of
Controller, and such other duties as from time to time may be assigned to him
by the Board or by the President of the Corporation.
<PAGE> 23
Section 41. Assistant Controllers. At the request of the Controller, or
in his absence or disability, an Assistant Controller designated by the Board
or by the President of the Corporation shall perform all the duties of the
Controller, and, when so acting, shall have all the powers of the Controller.
Each Assistant Controller shall perform such other duties as from time to time
may be assigned to him by the Controller or by the Board or by the President of
the Corporation.
Section 42. Salaries. The salaries of the officers may be fixed from
time to time by the Board, and no officer shall be precluded from receiving
such salary by reason of the fact that he is also a director of the
Corporation.
ARTICLE VI
Execution of Instruments, etc.
Section 43. Contracts, etc., How Executed. The Board, subject to the
provisions of Sections 29. and 46., may authorize any officer or officers,
agent or agents to enter into any contract or to execute and deliver any
instrument in the name of and in behalf of the Corporation, and such authority
may be general or confined to specific instances.
Section 44. Loans. No loans shall be contracted in behalf of the
Corporation unless authorized by the Board. When such
<PAGE> 24
authorization has been given by the Board, any officer or agent of the
Corporation thereunto authorized may effect loans and advances at any time for
the Corporation from any institution, firm or individual, and for such loans
and advances may make, execute and deliver promissory notes, bonds, or other
evidences of indebtedness of the Corporation and, as security for the payment
of any and all loans, advances, indebtedness and liabilities of the
Corporation, may (subject to such authorization) pledge, hypothecate, or
transfer any and all stocks, securities, and other personal property at any
time owned by the Corporation and to that end endorse, assign, and deliver the
same. Such authority may be general or confined to specific instances.
Section 45. Deposits. Funds of the Corporation may be deposited from
time to time to the credit of the Corporation with such depositories as may be
selected by the Board or by any officer or officers, agent or agents of the
Corporation to whom such power may be delegated from time to time by the Board.
Section 46. Checks, Drafts, etc. All checks, drafts, or other orders
for the payment of money, notes, acceptances, or other evidences of
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers, agent or agents of the Corporation, and in such manner, as
shall be determined from time to time by resolution of the Board. Unless
otherwise provided by resolution of the Board, endorsements for deposit to the
credit of the Corporation in any of its duly authorized depositories may be
39
<PAGE> 25
made, without countersignature, by the President or any Vice President or the
Treasurer, or by any other officer or agent of the Corporation to whom such
power shall have been delegated by the Board, or may be made by hand-stamped
impression in the name of the Corporation.
Section 47. Sale or Transfer of Securities. Stock certificates, bonds,
or other securities held or owned by the Corporation may be sold, transferred,
or otherwise disposed of pursuant to authorization by the Board, and in any
such event, the stock certificates, registered bonds or other securities so
authorized to be sold, transferred or otherwise disposed of may be assigned or
transferred from the name of the Corporation by the signature of the President
or any Vice President.
ARTICLE VII
Shares and Their Transfer
Section 48. Certificates. The shares of the Corporation shall be
represented by certificates signed by the President or a Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Corporation, and sealed with the seal of the Corporation or a facsimile
thereof.
When the Corporation is authorized to issue shares of more than one class,
there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the Corporation will furnish to any
stockholder upon request and
<PAGE> 26
without charge, a full or summary statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series so far as the same have been fixed and
determined and the authority of the Board to fix and determine the relative
rights and preferences of subsequent series.
Section 49. Signatures. The signatures of the officers upon a
certificate may be facsimiles where the certificate is signed by (a) a Transfer
Agent or an Assistant Transfer Agent, other than the Corporation itself, or by
(b) a Transfer Clerk acting on behalf of the Corporation and a Registrar. In
case any officer who has signed or whose facsimile signatures has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of its issue.
Section 50. Transfer of Shares. Transfers of shares of the stock of the
Corporation shall be made on the stock books of the Corporation by the holder
of record of such shares or by his attorney thereunto duly authorized, and on
surrender of the certificate or certificates for such shares. A person in
whose name shares of stock stand on the books of the Corporation shall be
deemed the owner thereof as regards to the Corporation; provided,
<PAGE> 27
however, that whenever any transfer of shares shall be made for collateral
security, and not absolutely, and written notice thereof shall be given to the
Secretary of the Corporation or to its Transfer Agent, if any, such fact shall
be stated in the entry of the transfer.
Section 51. Lost and Destroyed Certificates. The holder of record of
any certificate of stock who shall claim that such certificate is lost or
destroyed may make an affidavit or affirmation of that fact and advertise the
same, if required to do so by the Board, in such manner as the Board may
require and furnish bond, if required to do so by the Board, in form and with
one or more sureties satisfactory to the Board and to the Transfer Agent and/or
Registrar, if any, in such sum as the Board may direct, sufficient to indemnify
the Corporation and the Transfer Agent and/or Registrar, if any, against any
claim that may be made against them, or any of them, on account of such
certificate, whereupon one or more new certificates may be issued of the same
tenor and for the same aggregate number of shares as the one alleged to be lost
or destroyed. The Board may delegate to any officer authority to administer
the provisions of this Section.
Section 52. Regulations. The Board may make such rules and regulations
as it may deem expedient concerning the issuance, transfer, and registration of
certificates of stock. It may appoint one or more Transfer Agents or
Registrars of Transfers or
<PAGE> 28
both, and may require all certificates of stock to bear the signature of either
or both.
Section 53. Fixing Record Date. The Board may fix a date not more than
forty days prior to the date set for any meeting of the stockholders as the
record date as of which the stockholders of record who have the right to and
are entitled to notice of and to vote at such meeting and any adjournment
thereof shall be determined, but in such case notice that such day has been
fixed shall be published at least five days before the day so fixed in a
newspaper published in the city, town, or county where the principal office of
the Corporation is located and in each city or town where an agency for
transfer of shares is maintained.
Section 54. Registered Stockholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owners of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Florida.
<PAGE> 29
ARTICLE VIII
Miscellaneous
Section 55. Dividends. Subject to the provisions of the Certificate of
Incorporation relating thereto, if any, dividends may be declared by the Board
at any regular or special meeting or by unanimous consent resolution of the
Board, pursuant to law. Dividends may be paid in cash, in property or in
shares of the capital stock, subject to any provisions of the Certificate of
Incorporation.
Section 56. Reserve for Contingencies. Before payment of any dividend,
there may be set aside out of any funds of the Corporation available for
dividends such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think conducive
to the interest of the Corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
Section 57. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year.
Section 58. Seal. The corporate seal shall have inscribed thereon "GTE
Florida Incorporated" and the words "Corporate Seal,
<PAGE> 30
Florida." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
Section 59. Indemnification. All Officers, Directors, and employees of
this Corporation shall be entitled to indemnification for their actions in
accordance with Florida law provided such Officers, Directors, and employees
have acted in good faith, in a manner they reasonably believed to be in the
best interest of the Corporation, and with respect to any criminal action or
proceeding, such Officers, Directors, and employees had no reasonable cause to
believe their conduct was unlawful.
ARTICLE IX
Amendments
Section 60. Amendments. These Bylaws may be altered, amended, or
repealed or new Bylaws may be adopted (a) at any regular or special meeting of
stockholders at which a quorum is present or represented by the vote of a
majority of the stock entitled to vote, provided notice of the proposed
alteration, amendment, or repeal be contained in the notice of such meeting; or
(b) by the Board at any regular or special meeting of the Board or by unanimous
consent resolution of the Board. Amendments made by the Board shall not be
inconsistent with any Bylaws that may have been adopted by the stockholders.
<PAGE> 1
Exhibit 12
GTE FLORIDA INCORPORATED AND SUBSIDIARY
STATEMENT OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
1995
-------------
<S> <C>
Net earnings available for fixed charges:
Net income $ 124,921
Add - Income tax expense 75,950
- Fixed charges 55,052
----------
Adjusted earnings: $ 255,923
Fixed charges:
Interest expense $ 48,476
Portion of rent expense
representing interest 6,576
----------
Adjusted fixed charges: $ 55,052
----------
CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES: 4.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 10,041
<SECURITIES> 0
<RECEIVABLES> 296,350
<ALLOWANCES> 22,556
<INVENTORY> 19,244
<CURRENT-ASSETS> 317,985
<PP&E> 3,929,385
<DEPRECIATION> 1,393,813
<TOTAL-ASSETS> 2,970,766
<CURRENT-LIABILITIES> 398,634
<BONDS> 724,123
<COMMON> 585,000
0
60,096
<OTHER-SE> 621,117
<TOTAL-LIABILITY-AND-EQUITY> 2,970,766
<SALES> 1,012,418
<TOTAL-REVENUES> 1,012,418
<CGS> 408,278
<TOTAL-COSTS> 763,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,022
<INCOME-PRETAX> 200,871
<INCOME-TAX> 75,950
<INCOME-CONTINUING> 124,921
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,921
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
