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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number: 0-5588
----------------------
HIGHLAND TELEPHONE COMPANY
(Exact name of registrant as specified in its charter)
----------------------
NEW YORK 14-0750550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 South Clinton Avenue, Rochester, New York 14646
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 783-5229
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
5.7% Cumulative Preferred None
Stock Series A
Securities registered pursuant to section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 22, 1995:
NO REGULAR MARKET IS MAINTAINED IN THE REGISTRANT'S
5.7% CUMULATIVE PREFERRED STOCK, SERIES A
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date: $4.50 Par Value Common Stock 506,758
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COVER PAGE -
LOGO
HIGHLAND TELEPHONE COMPANY
a Frontier Corporation company
1994 ANNUAL REPORT
- -------------------------------------------------------------
INSIDE COVER
OUR BUSINESS AND TERRITORY
Highland Telephone Company, a subsidiary of Frontier Corporation,
furnishes telecommunications services within a franchised area in
Orange and Ulster Counties, New York, comprising approximately 335
square miles. The Company has ten exchanges which provide service
to approximately 56,000 access lines.
Highland Telephone Company is committed to equal opportunity for
all employees regardless of race, color, religion, sex, age,
national origin, handicap or veteran status.
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HIGHLAND TELEPHONE COMPANY (the "Company")
BOARD OF DIRECTORS
- ------------------
Ronald L. Bittner Louis L. Massaro
Director of the Company; Director and Secretary
also Chairman, President and of the Company; also
Chief Executive Officer of Corporate Vice President-
Frontier Corporation, a tele- Finance of Frontier
communications company. Corporation,a telecommuni-
cations company.
Jeremiah T. Carr
Director, President and Chief
Executive Officer of the Company;
also Director, President and
Chief Executive Officer of
Rochester Telephone Corp.,
a telecommunications company.
EXECUTIVE OFFICERS
- ------------------
Jeremiah T. Carr Louis L. Massaro
President and Chief Executive Secretary of the Company;
Officer of the Company; also also Corporate Vice
Director, President and Chief President-Finance of
Executive Officer of Frontier Corporation,
of Rochester Telephone Corp., a telecommunications
a telecommunications company. company.
James B. Loughlin Martin Mucci
Vice President and General Treasurer of the Company;
Manager of the Company; also also Vice President-
Vice President-Operations and Regulatory and Finance of
Customer Service Frontier Rochester Telephone Corp.,
Telephone Group and Rochester a telecommunications
Telephone Corp., a telecommunica- company.
tions company.
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HIGHLAND TELEPHONE COMPANY
5 YEAR SUMMARY OF OPERATIONS - pg. 1
(Not Covered by Report of Independent Accountants)
For the year ended December 31,
1994 1993 1992
STATEMENT OF INCOME
Operating Revenues $44,631,983 $41,527,353 $37,397,643
Operating Expenses & Taxes 30,150,634 27,713,830 25,876,184
----------- ----------- -----------
14,481,349 13,813,523 11,521,459
Federal Income Tax 4,752,600 4,518,903 3,285,000
----------- ----------- -----------
Income from operations 9,728,749 9,294,620 8,236,459
Other Income (Expense)-Net 287,503 322,376 116,419
----------- ----------- -----------
Income Before Fixed Charges 10,016,252 9,616,996 8,352,878
Fixed Charges 777,924 1,150,428 1,394,939
----------- ----------- -----------
Net Income $ 9,238,328 $ 8,466,568 $ 6,957,939
BALANCE SHEET
Current Assets $16,511,545 $16,168,983 $11,357,506
Telephone Plant 61,457,925 64,129,219 64,424,132
Deferred & Other Assets 4,248,319 3,283,673 3,714,723
----------- ----------- -----------
Total Assets $82,217,789 $83,581,875 $79,496,361
----------- ----------- -----------
Current Liabilities $15,110,202 $26,067,683 $18,805,309
Long-Term Debt 8,900,000 3,000,000 8,640,000
Deferred Federal
Income Taxes 10,486,502 11,188,704 12,741,236
Other Deferred Credits 4,046,362 2,225,488 579,412
Share Owners' Equity 43,674,723 41,100,000 38,730,404
----------- ----------- -----------
Total Liabilities &
Share Owners Equity $82,217,789 $83,581,875 $79,496,361
----------- ----------- -----------
Cash Dividends:
Preferred 158,968 159,903 160,527
Common 6,496,637 5,929,069 5,042,242
----------- ----------- -----------
Total Dividends $ 6,655,605 $ 6,088,972 $ 5,202,769
----------- ----------- -----------
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HIGHLAND TELEPHONE COMPANY
5 YEAR SUMMARY OF OPERATIONS - pg. 2
(Not Covered by Report of Independent Accountants)
For the year ended December 31,
1994 1993 1992
Per Share Information (Note 1):
Net Income Per
Common Share $17.92 $16.39 $13.41
Cash Dividends Per $12.82 $11.70 $ 9.95
Common Share
Average Shares of Common Stock
Outstanding 506,758 506,758 506,758
Note 1: Net income per common share is derived by deducting
preferred stock dividends from net income. Cash dividends per
common share represent the annual dividend rate paid by the
Company.
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HIGHLAND TELEPHONE COMPANY
5 YEAR SUMMARY OF OPERATIONS - pg. 3
(Not Covered by Report of Independent Accountants)
For the year ended December 31,
1991 1990
STATEMENT OF INCOME
Operating Revenues $33,936,765 $33,532,780
Operating Expenses & Taxes 25,118,735 23,878,196
----------- -----------
8,818,030 9,654,584
Federal Income Tax 1,891,000 2,616,000
----------- -----------
Income from operations 6,927,030 7,038,584
Other Income (Expense)-Net 251,770 69,990
----------- -----------
Income Before Fixed Charges 7,178,800 7,108,574
Fixed Charges 1,708,306 1,946,604
----------- -----------
Net Income $ 5,470,494 $ 5,161,970
BALANCE SHEET
Current Assets $ 8,261,303 $ 8,816,911
Telephone Plant 62,996,556 62,169,340
Deferred & Other Assets 3,882,020 3,795,550
----------- -----------
Total Assets $75,139,879 $74,781,801
----------- -----------
Current Liabilities $14,885,869 $13,665,182
Long-Term Debt 10,730,000 12,210,000
Deferred Federal
Income Taxes 11,976,992 12,757,614
Other Deferred Credits 563,784 802,941
Share Owners' Equity 36,983,234 35,346,064
----------- -----------
Total Liabilities &
Share Owners Equity $75,139,879 $74,781,801
----------- -----------
Cash Dividends:
Preferred 161,464 164,567
Common 3,663,860 3,020,278
----------- -----------
Total Dividends $ 3,825,324 $ 3,184,845
----------- -----------
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HIGHLAND TELEPHONE COMPANY
5 YEAR SUMMARY OF OPERATIONS - pg. 4
(Not Covered by Report of Independent Accountants)
For the year ended December 31,
1991 1990
Per Share Information (Note 1):
Net Income Per
Common Share $10.48 $ 9.86
Cash Dividends Per $ 7.23 $ 5.96
Common Share
Average Shares of Common Stock
Outstanding 506,758 506,758
Note 1: Net income per common share is derived by deducting
preferred stock dividends from net income. Cash dividends per
common share represent the annual dividend rate paid by the
Company.
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HIGHLAND TELEPHONE COMPANY
A subsidiary of Frontier Corporation -
(formerly Rochester Telephone Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Corporate Name Change and Restructuring
- ---------------------------------------
In December 1994, upon receiving shareowner approval,
Rochester Telephone Corporation, the parent company, reorganized as
a holding company and changed its name to Frontier Corporation.
Highland Telephone Company (the "Company") has since adopted the
Frontier brand and will ask the shareholders to approve an
amendment to the Restated Certificate of Incorporation to change
the Company's name to Frontier Communications of New York, Inc. at
its 1995 Annual Meeting. The new name reflects the pioneering
heritage of our past combined with our willingness to embrace the
challenges of the future. The name also symbolizes the change from
a corporation focused primarily in Rochester, New York to a
corporation that is expanding geographically and currently operates
in 32 states.
Total Operating Revenues
- ------------------------
Total operating revenues increased $3,105,000 or 7.5 percent
in 1994; and $4,130,000, or 11.0 percent in 1993, over the
immediate previous year.
-Local Service Revenue
Local service revenue increased $1,055,000, or 9.5 percent,
from $11.1 million in 1993 to $12.2 million in 1994. Local service
revenue increased $1,857,000, or 20.0 percent, in 1993 from 1992.
The 1994 and 1993 revenue growth are the result of increases in
access lines in service, higher sales of enhanced custom calling
features, and, advanced number identification products, like Caller
ID. Also in 1993, revenues included the full year impact of a rate
increase associated with the New York State Public Service
Commission's rate restructure plan. This increase was the result
of an October 1992 New York State Public Service Commission
decision which required all telephone companies to recover more
costs associated with providing local dial tone from local service
rates. Traditionally, a significant portion of these costs were
recovered through toll revenues. This plan was designed to be
revenue neutral and only represents a reclassification of toll
revenues to local service revenues. This rate increase contributed
approximately $530,000 to 1993's local service revenue increase
from 1992.
The 1993 revenue increase also includes the January 1, 1993
regulation of inside wire, reclassifying miscellaneous revenues as
local service revenues.
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-Toll Service Revenue
Toll service revenue increased $2,659,000, or 13.4 percent,
from $19.8 million in 1993 to $22.4 million in 1994. Toll service
revenue increased $599,000, or 3.1 percent, from 1992. The 1994
revenue increase is attributable to growth in long distance usage.
The 1993 revenue increase was primarily the result of
increased calling volume offset in part by the implementation of
the New York State Public Service Commission's rate restructure
plan, when toll revenues were reclassified as local service
revenues.
In general, prices being charged to long distance companies
for access service usage, which represents fees charged for the use
of the Company's network, declined slightly over the past two years
to address the Company's need to be competitive in this market
sector. The Company expects this price decline to continue as
competition increases.
-Directory Revenues
Directory revenues increased $33,000, or 0.9 percent, in 1994
and $54,600, or 1.6 percent, in 1993. The marginal revenue
increases in both 1994 and 1993 reflect that there was virtually no
growth in the volume of advertising sales. Given existing
competition in the directory marketplace, the Company anticipates
that the 1995 directory revenues will increase approximately 3.4
percent.
-Miscellaneous Revenues
Miscellaneous revenues decreased $201,200, or 2.7 percent, in
1994 after increasing $1,635,000, or 28.2 percent, in 1993 from
1992. The 1994 decrease was primarily the result of increased
billing and collection revenues, reflecting higher calling volumes,
and deregulated sales, which were offset in part by the decrease of
AT&T contract services.
The 1993 revenue increase was the result of increase billing
and collection revenues and AT&T contract services, which were
offset in part by the reclassification of inside wire revenues to
local service revenues.
Operating Expenses and Taxes
- ----------------------------
Operating expenses and taxes increased 8.8 percent in 1994 and
7.1 percent in 1993. Excluding depreciation, expenses increased
9.4 percent in 1994 and 8.1 percent in 1993. The 1994 expense
increase is attributed to the $1.8 million increase in data
processing expenses associated with the creation, in 1994, of a
corporate data processing organization. In 1994, the Company
achieved wage and benefit savings associated with combining
administrative functions and streamlining operations to arrive at a
reduced cost structure.
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In 1994, the Company adopted the Financial Accounting
Standards Board Statement No. 112 (FAS 112), "Employers' Accounting
for Postretirement Benefits", which addresses the manner in which
companies must record expenses for postemployment benefits,
including payments for disability, pre-pension leave (salary
continuation) and severance pay. FAS 112 requires that projected
future costs of providing postemployment benefits be recognized as
an expense as employees render service rather than when the
benefits are paid. Adoption of FAS 112 required the Company to
calculate, and record in 1994, the cumulative effect of the change
in accounting methodology for all years prior to 1994. For 1994,
the adoption of this standard resulted in additional operating
expenses in the amount of $76,900.
The 1993 expense increase is primarily the result of an
accounting change associated with recording certain employee
benefits. In 1993, the Company adopted the Financial Accounting
Standards Board Statement No. 106 (FAS 106), "Employers' Accounting
for Postretirement Benefits Other than Pensions", using the delayed
recognition of the transition obligation method. FAS 106 requires
that projected future costs of providing postretirement benefits,
such as health care and life insurance, be recognized as an expense
as employees render service instead of when benefits are paid. For
1993, the adoption of this standard resulted in additional
operating expenses in the amount of $1,351,000. However, a
substantial portion of this increase was offset by a change in
accounting for pensions. The change requires that the Company
amortize, over a ten year period, the cumulative amount of pension
funding from January 1, 1987 over the amount of pension expense
which would have been recognized through December 31, 1992 under
Financial Accounting Standards Board No. 87 (FAS 87), "Employers'
Accounting for Pensions", reducing pension expenses throughout the
amortization period. The net impact of adopting FAS 106 and
recording the accounting change for FAS 87 actually resulted in
only $1,106,000 of additional expenses in 1993.
Depreciation expenses increased 6.2 percent in 1994 and 3.3
percent in 1993. The increases in both years are the result of
additions to telephone plant in service in each year.
Fixed Charges
- -------------
Total fixed charges decreased 32.4 percent in 1994 and 17.5
percent in 1993, primarily as a result of pay downs on long term
debt and decrease in interest rates. In October 1993, the Company
retired $8.6 million of first mortgage bonds early using funds
advanced from the parent company, Frontier Corporation. In April
1992, the Company retired $3.4 million of first mortgage bonds
using internally generated cash and a $3 million short term advance
from the parent company. In July 1993, upon approval from the New
York State Public Service Commission, this advance was reclassified
as long term debt.
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Income Taxes
- ------------
The effective federal income tax rate in 1994 was 34.0
percent, compared with 35.0 percent in 1993 and 32.1 percent in
1992. As a result of the Revenue Reconciliation Act of 1993, the
1993 income tax provision includes the impact of the federal tax
rate increase from 34 to 35 percent. The impact amounted to
$155,800. (See notes 1 and 5 in Notes to the Financial
Statements).
Net Income
- ----------
Net income increased 9.1 percent in 1994 and 21.7 percent in
1993. The 1994 increase in net income reflect increases in local
and toll revenues, interest income, and decreased interest expense
on outstanding debt. The 1993 increase in net income reflects
increases in local, toll and billing and collection revenues, and
decreased interest expense on outstanding debt.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents amounted to $621,145 at year end
1994, $2,615,010 at year end 1993, and $1,474,010 at year end 1992.
The decrease in 1994 is the result of pay downs on short term debt
and increased dividend payments. The increase is 1993 was mostly
due to increased earnings.
At year end 1994, the Company had outstanding short term
borrowings of $2.4 million with Frontier Corporation, the parent
company. The interest rate on these borrowings was 6.54 percent at
December 31, 1994. The Company also has a long term promissory
note payable to Frontier Corporation for $8.9 million. These
borrowings were used to retire long term first mortgage bonds, to
take advantage of lower interest rates, and to pay off a short term
loan owed to Chemical Bank. The original debt served to finance
the Company's construction program prior to 1989. The Company
anticipates meeting its debt obligation with cash generated from
operations.
A key financial indicator of the Company's ability to meet its
debt obligations is pre-tax interest coverage. For the year 1994,
the Company's pre-tax income of 19.0 times total fixed charges is
greater than the pre-tax income to total fixed charges ratio of
12.3 times and 8.3 times for the years 1993 and 1992, respectively.
The 1994 pre-tax interest coverage ratio of 19.0 times total fixed
charges is attributable to an increase in earnings and a decrease
in interest expense the Company experienced in connection with a
lower debt balance and lower interest rates charged on that debt.
The ratio of long term debt to total capitalization increased
to 16.9 percent at the end of 1994, from 6.8 percent at the end of
1993 and from 18.2 percent at the end of 1992. This increase is
due to the 1994 reclassification of short term borrowings to long
term debt offset in part by an 18.9 percent growth in retained
earnings during the two year period, year end 1992 through year end
1994.
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After tax coverage of Preferred Stock dividends was 58.1 times
net income in 1994 compared to 52.8 times net income in 1993 and
43.3 times net income in 1992.
In 1994, the Company internally financed 100.0 percent of its
$2,696,000 construction program, in 1993, 100.0 percent of a
$5,186,000 program, and in 1992, 100.0 percent of a $6,865,000
program. During 1995, the Company will expend $3,885,000 for
additions to plant, property, and equipment. Working capital
requirements for the 1995 construction program are projected to be
met by internally generated funds.
In the past, the Company sold its own debt securities.
Management feels that the Company has the ability to market its own
debt securities.
Regulatory Proceedings
- ----------------------
Effective January 1, 1993, the Company adopted FAS 106,
"Employers' Accounting for Postretirement Benefits Other than
Pensions", and petitioned the Federal Communications Commission
(FCC), to recover FAS 106 costs through the rate making process.
Although the FCC originally rejected the Company's petition, the
FCC has since allowed the Company to recover the portion of the FAS
106 cost associated with the Transition Benefit Obligation (the
unrecorded postretirement benefit liability) amortized over a
twenty year period, pending the FCC's investigation as to whether
this cost should be recoverable by price cap regulated companies.
Rates reflecting this expense went into effect July 2, 1993. The
FCC s investigation remains pending.
On September 7, 1993, the New York State Public Service
Commission issued a statement of policy and order concerning the
accounting and ratemaking treatment for companies adopting FAS 106
and FAS 87. The policy states that rate filings to recover the
effects of adopting FAS 106 and FAS 87 shall encompass a general
rate change whereby all elements of costs are presented and
considered. Companies can not file single issues rate changes for
the purpose of implementing FAS 106 into rates. In 1995, the
Company does not anticipate the need for such a filing.
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Effects of Competition and Inflation
- ------------------------------------
The 1990's will bring further deregulation of
telecommunication products and services, as well as increasing
competition in virtually all of the Company's markets, including
local dial tone. Today, competition is prevalent with respect to
business telecommunication systems, directory, and telephone sales.
The Company has made and will continue to make significant
investments it its network, including deployment of fiber optic
cable and digital switches. This will enable the Company to
compete more effectively, to provide enhanced services and attract
new businesses. Furthermore, the Company believes its commitment
to an enhanced quality focus will strengthen its strong service
position. This is essential to sustaining viability in all of the
Company's markets and a prerequisite to competing in the 1990's.
The Company intends to continue to counteract the effects of
inflation through cost reductions, improved productivity, enhanced
marketing programs, and the filing of timely requests for rate
relief.
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Price Waterhouse LLP
1900 Chase Square
Rochester, NY 14604-1984
(716) 232-4000
Report of Independent Accountants
January 27, 1995
To the Shareowners and
Board of Directors of
Highland Telephone Company
In our opinion, the accompanying balance sheets and the related
statements of income, of retained earnings and of cash flows
present fairly, in all material respects, the financial position of
Highland Telephone Company at December 31, 1994, 1993 and 1992, and
the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 7 to the financial statements, during the
first quarter of 1993 the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions."
/s/ Price Waterhouse LLP
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<TABLE>
HIGHLAND TELEPHONE COMPANY
(A subsidiary of Frontier Corporation)
Balance Sheet - Page 1
<CAPTION>
December 31,
----------- ------------ ------------
1994 1993 1992
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 621,145 $ 2,615,010 $ 1,474,010
Accounts receivable 9,016,180 8,375,451 7,841,208
Accounts receivable - affiliates 5,815,779 3,871,791 496,719
Refundable taxes 293,689 275,962 286,756
Materials and supplies 251,225 420,654 602,835
Prepayments 513,527 610,115 655,978
------------ ------------ ------------
Total current assets 16,511,545 16,168,983 11,357,506
------------ ------------ ------------
Telephone plant, at original cost:
Telephone plant in service 104,047,094 100,598,594 98,991,200
Telephone plant under
construction 855,410 1,982,377 2,555,254
------------ ------------ ------------
104,902,504 102,580,971 101,546,454
Less - Accumulated depreciation 43,444,579 38,451,752 37,122,322
------------ ------------ ------------
Net telephone plant 61,457,925 64,129,219 64,424,132
------------ ------------ ------------
Regulated deferred asset 2,770,676 2,804,242 3,456,000
Prepaid pension expense 1,303,179 406,591
Other assets 174,464 72,840 258,723
------------ ------------ ------------
Total assets $ 82,217,789 $ 83,581,875 $ 79,496,361
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
HIGHLAND TELEPHONE COMPANY
(A subsidiary of Frontier Corporation)
Balance Sheet, Page 2
<CAPTION>
December 31,
----------- ------------ ------------
1994 1993 1992
<S> <C> <C> <C>
Liabilities and Shareowners' Equity
Current liabilities:
Notes payable $ 6,000,000
Current portion of long-term debt 90,000
Accounts payable $ 5,440,783 $ 6,931,887 6,538,513
Advances/accounts payable -
affiliates 8,480,742 16,218,890 3,295,775
Common stock dividends payable 1,500,004 1,271,963
Customer deposits 403,763 447,951 473,336
Advance billing for telephone service 301,286 290,898 254,422
Preferred dividends payable 43,052 43,833 43,989
Income taxes due to parent 402,338 609,898 606,210
Interest accrued 38,238 24,322 231,101
------------ ------------ ------------
Total current liabilities 15,110,202 26,067,683 18,805,309
------------ ------------ ------------
Notes payable - affiliates 8,900,000 3,000,000
Long-term debt 8,640,000
------------ ------------ ------------
Deferred federal income taxes 10,486,502 11,188,704 12,741,236
------------ ------------ ------------
Other deferred credits 699,186 636,488 579,412
------------ ------------ ------------
Other postemployment benefits 3,347,176 1,589,000
------------ ------------
Shareowners' equity:
Common stock, $4.50 par value -
Authorized - 1,257,333 shares
Issued and outstanding - 506,758
shares 2,280,411 2,280,411 2,280,411
Capital in excess of par value 683,327 683,327 683,327
Other capital paid by parent company 7,005,266 7,005,266 7,005,266
Retained earnings 31,204,319 28,621,596 26,244,000
------------ ------------ ------------
Common shareowner's equity 41,173,323 38,590,600 36,213,004
<PAGE>
<PAGE>
Balance Sheet, Page 2 (Cont'd)
Preferred stock (cumulative), $100
par value -
Authorized - 40,000 shares
Issued and outstanding -
Series A- 5-7/8% - 18,694 shares 1,869,400 1,869,400 1,869,400
Series B- 7.8% - 6,320 shares in
1994, 6,400 shares in 1993 and
6,480 shares in 1992 632,000 640,000 648,000
------------ ------------ ------------
Total shareowners' equity 43,674,723 41,100,000 38,730,404
------------ ------------ ------------
Total liabilities and
shareowners' equity $82,217,789 $83,581,875 $79,496,361
=========== =========== ============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
HIGHLAND TELEPHONE COMPANY
(A subsidiary of Frontier Corporation)
Statement of Income
<CAPTION>
For the year ended December 31,
----------- ----------- ----------
1994 1993 1992
<S> <C> <C> <C>
Operating revenues:
Local service $12,204,921 $11,149,767 $9,292,840
Toll service 22,453,673 19,794,474 19,195,674
Directory advertising revenues 3,589,903 3,556,916 3,502,336
Miscellaneous 7,223,074 7,424,323 5,789,487
Less - Uncollectibles (839,588) (398,127) (382,694)
----------- ----------- ----------
Total operating revenues 44,631,983 41,527,353 37,397,643
----------- ----------- ----------
Operating expenses:
Plant specific 6,702,322 5,821,310 5,450,960
Plant non-specific 1,192,426 1,398,685 1,345,064
Depreciation 5,716,417 5,383,946 5,214,421
Customer operations 6,711,903 5,992,779 5,735,262
Corporate operations 5,831,836 5,399,458 4,573,621
Other taxes 3,995,730 3,717,652 3,556,856
----------- ----------- ----------
Total operating expenses 30,150,634 27,713,830 25,876,184
----------- ----------- ----------
Operating income 14,481,349 13,813,523 11,521,459
----------- ----------- ----------
Interest expense 777,924 1,150,428 1,394,939
Other income and expense:
Allowance for funds used during
construction 24,492 117,817 121,764
Other income (expense), net 263,011 204,559 (5,345)
----------- ----------- ----------
Income before taxes 13,990,928 12,985,471 10,242,939
Federal income taxes 4,752,600 4,518,903 3,285,000
----------- ----------- ----------
Net income $ 9,238,328 $ 8,466,568 $6,957,939
=========== =========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
HIGHLAND TELEPHONE COMPANY
(A subsidiary of Frontier Corporation)
Statement of Income
<CAPTION>
For the year ended December 31,
----------- ----------- ----------
1994 1993 1992
<S> <C> <C> <C>
Balance, January 1 $28,621,596 $26,244,000 $24,488,830
Net income 9,238,328 8,466,568 6,957,939
------------ ----------- -----------
Total 37,859,924 34,710,568 31,446,769
------------ ----------- -----------
Dividends declared:
Preferred stock -
Series A ($5.875 per share) 109,827 109,827 109,827
Series B ($7.80 per share) 49,141 50,076 50,700
Common stock -
Paid to parent company 6,496,637 5,929,069 5,042,242
------------ ----------- -----------
Total 6,655,605 6,088,972 5,202,769
------------ ----------- -----------
Balance, December 31 $31,204,319 $28,621,596 $26,244,000
=========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
HIGHLAND TELEPHONE COMPANY (A subsidiary of Frontier Corporation)
Statement of Cash Flows
<CAPTION>
For the year ended December 31,
------------ ----------- ----------
1994 1993 1992
<S> <C> <C> <C>
Operating activities:
Net income $ 9,238,328 $ 8,466,568 $6,957,939
------------ ----------- ----------
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation and amortization 5,716,417 5,444,826 5,231,667
Changes in operating assets and
liabilities -
Increase in accounts receivable,
accounts receivable - affiliates
and refundable taxes (2,602,444) (3,898,521) (1,636,810)
Decrease (increase) in materials
and supplies 169,429 182,181 (62,649)
Decrease (increase) in prepayments
(includes prepaid pension) (800,000) (360,728) 72,166
Decrease in regulated deferred
asset 33,566 651,758 44,000
Decrease (increase) in other
assets (101,624) 125,004 106,051
Increase (decrease) in accounts
payable, advances/accounts payable -
affiliates and customer deposits (4,273,440) (3,008,896) 3,344,811
Increase (decrease) in advance
billing 10,388 36,476 (6,872)
Increase in postretirement
benefits obligation 1,758,176 1,589,000
Decrease in income taxes due to
parent and interest accrued (193,644) (203,091) (976,655)
(Decrease) increase in deferred
federal income taxes (702,202) (1,552,532) 764,244
Increase (decrease) in other
deferred credits 62,698 57,076 15,628
----------- ----------- ----------
Total adjustments (922,680) (937,447) 6,895,581
----------- ----------- ----------
Net cash provided by
operating activities 8,315,648 7,529,121 13,853,520
<PAGE>
<PAGE>
Statement of Cash Flows (cont'd)
Investing activities:
Expenditures for property, plant
and equipment (3,045,123) (5,089,033) (6,641,997)
----------- ----------- ----------
Net cash used in
investing activities (3,045,123) (5,089,033) (6,641,997)
----------- ----------- ----------
Financing activities:
Advances from affiliate 10,300,000 2,700,000
Repayment of advances from affiliate (5,000,000)
Long-term debt acquired 5,900,000 3,000,000
Repayments of long-term debt (8,730,000) (3,480,000)
Dividends paid (8,156,390) (5,861,088) (4,954,613)
Retirements of preferred stock (8,000) (8,000) (8,000)
----------- ----------- ----------
Net cash used in financing
activities (7,264,390) (1,299,088) (5,742,613)
----------- ----------- ----------
Net increase (decrease) in cash and
cash equivalents (1,993,865) 1,141,000 1,468,910
Cash and cash equivalents at
beginning of year 2,615,010 1,474,010 5,100
----------- ----------- ----------
Cash and cash equivalents at
end of year $ 621,145 $ 2,615,010 $1,474,010
=========== =========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
HIGHLAND TELEPHONE COMPANY
(A subsidiary of Frontier Corporation)
Notes to Financial Statements
December 31, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------
The accounting policies of Highland Telephone Company (the
Company) are in conformity with generally accepted accounting
principles and, where applicable, conform to the accounting
principles as prescribed by the New York State Public Service
Commission (PSC) and federal regulatory bodies. The more signi-
ficant accounting policies are summarized in the following
paragraphs.
Basis of Presentation
- ---------------------
Certain prior year figures have been reclassified to conform with
current year presentation.
Materials and Supplies
- ----------------------
Materials and supplies are stated at the lower of cost or market,
based on average unit cost.
Telephone Plant
- ---------------
Additions to and replacements of telephone plant are capitalized
at original cost, including costs for benefits and supervision
applicable to construction labor. The cost of depreciable
property units retired, plus removal costs, less salvage is
charged to accumulated depreciation. Replacements, renewals and
betterments of units of property are capitalized. Replacement of
items not considered units of property and all repairs and
maintenance are charged to operating expense.
Depreciation
- ------------
Depreciation is computed on the straight-line method using
estimated service lives of the various classes of telephone
plant. The overall composite depreciation rate was 5.4% in 1994,
1993 and 1992.
Allowance for Funds Used During Construction
- --------------------------------------------
The Company includes in its telephone plant accounts an imputed
cost of debt and equity funds used for the construction of
telephone plant and credits such amounts to other income.
<PAGE>
<PAGE>
Federal Income Taxes
- --------------------
The Company is included in the consolidated federal income tax
return of its parent, Frontier Corporation (FC). The Company
pays FC for the federal income tax liability resulting from the
filing by FC of a consolidated U.S. federal income tax return,
determined on a separate entity basis. For federal income tax
purposes, the Company takes maximum advantage of available tax
incentives. In addition, certain interest and other costs
capitalized for financial statement purposes are deducted in
computing federal income taxes.
Deferred income taxes are provided by regulated operations in
compliance with the normalization provisions of current tax law
and regulatory orders. The major temporary differences reflected
in the deferred tax liability are depreciation and investment tax
credits. Excess deferred taxes applicable to Telephone
Operations are amortized in compliance with the normalization
provisions of current tax law and regulatory orders. This
amortization is normalized over the same time period as the
related asset generating the deferral.
Regulatory Asset
- ----------------
FAS 109 requires that a regulatory asset and a deferred tax
liability be recognized to reflect the probable increase in
future revenue and an increase in future tax expense which will
be recognized as the result of a reversal of temporary
differences which decreased tax expense when originally incurred.
The regulatory asset and deferred tax liability also includes a
gross-up for taxes which will be incurred as the result of the
future increase in revenue.
Deferred Investment Credits
- ---------------------------
Deferred investment credits are included in income as a reduction
of income tax expense over the estimated useful lives of the
assets that gave rise to the credits. Income tax expense for
1994, 1993, and 1992 has been reduced by $224,500, $236,700, and
$242,600, respectively, resulting from the amortization of such
investment credits.
Cash Flows
- ----------
For purposes of the Statement of Cash Flows, the Company
considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Actual interest paid was $769,569, $872,139, and $1,377,512 in
1994, 1993 and 1992, respectively. In addition, actual federal
income taxes remitted to the parent company were $5,676,000 in
1994, $5,416,000 in 1993, and $3,362,000 in 1992.
<PAGE>
<PAGE>
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT:
- --------------------------------------
Telephone plant in service and under construction are stated at
cost. Listed below are the major classes of telephone plant in
service as of December 31:
1994 1993
------------ ------------
Land and buildings $ 8,014,085 $ 7,997,598
Local and toll service lines 47,348,672 45,716,820
Furniture, office equipment,
vehicles, tools and other 5,305,425 5,347,342
Central office equipment 40,620,052 38,876,095
Station equipment 2,758,860 2,660,739
------------ ------------
$104,047,094 $100,598,594
============ ============
NOTE 3 - CAPITALIZATION:
- -----------------------
Common Shareowner's Equity
- --------------------------
On March 31, 1976, Frontier Corporation was granted approval by
the PSC to obtain all of the Company's outstanding common stock
in accordance with an agreement and plan of merger between the
Company and FC. Subsequent to the merger, FC has contributed
$7,005,266 in additional capital to the Company. All of the
outstanding shares of common stock of Highland Telephone Company
are held by FC.
Preferred Shareowners' Equity
- -----------------------------
The 5-7/8% Series A is redeemable only at the option of the
Company at par plus unpaid accumulated dividends. The 7.8%
Series B is redeemable at par plus varying premium rates and any
unpaid accumulated dividends. The redemption price plus premiums
for Series B ranges from $100.80 to $105.00. During 1994, 1993
and 1992, 80 shares of Series B were redeemed in each year.
Owners of preferred shares are entitled to voting rights under
certain circumstances.
Long-Term Debt
- --------------
In October 1993, the Company retired its Series K, L, M and N
first mortgage bonds at a loss using $8,600,000 advanced from FC.
<PAGE>
<PAGE>
NOTE 4 - NOTES PAYABLE:
- ----------------------
The Company has a promissory note payable to Frontier Corporation
for $3,000,000, which was consummated on October 15, 1993.
Interest is due monthly at a rate of 6.5% per annum, and the
principal is due on July 6, 2003.
On January 1, 1995, the Company entered into a ten-year loan
agreement with FC to refinance $5,900,000 in advances. Interest
is due monthly at a rate of 8.4% per annum.
NOTE 5 - FEDERAL INCOME TAXES:
- -----------------------------
Components of federal income taxes are:
1994 1993 1992
Current $5,421,235 $ 5,533,000 $3,341,000
Deferred (668,635) (1,014,000) (56,000)
----------- ------------ -----------
$4,752,600 $ 4,519,000 $3,285,000
=========== ============ ===========
The following is a reconciliation between federal income tax
expense and tax computed on income before federal income tax at
the applicable statutory rate:
1994 1993 1992
----------------- ----------------- ----------------
Amount % Amount % Amount %
---------- ----- ---------- ----- ---------- ----
Tax expense
at statutory
rate $4,897,000 35.0% $4,545,000 35.0% $3,483,000 34.0%
Accelerated
depreciation 173,600 1.2 239,400 1.9 132,600 1.3
Cost of removal (20,200) (.1) (16,000) (.1) (33,000) (.3)
Investment tax
credit (224,500) (1.6) (236,700)(1.7) (242,600)(2.4)
Other, net (73,300) (.5) (12,700) (.1) (55,000) (.5)
----------- ----- ---------- ---- ----------- ----
$4,752,600 34.0% $4,519,000 35.0% $3,285,000 32.1%
=========== ===== ========== ===== ========== =====
<PAGE>
<PAGE>
As a result of the Revenue Reconciliation Act of 1993, the 1993
Income Tax provision includes the impact of the federal tax rate
increase from 34% to 35%. The impact amounts to $155,808.
Deferred tax liabilities (assets) are comprised of the following
at December 31:
1994 1993
------------ ------------
Accelerated depreciation $11,820,827 $11,886,727
Investment tax credit 399,448 503,548
MTA taxes 135,833 121,733
Other 30,186 25,379
------------ ------------
Gross deferred tax
liabilities 12,386,294 12,537,387
------------ ------------
Partnership losses (171,400) (189,000)
Rate case (193,096) (156,496)
Insurance reserve (36,500) (35,100)
Moratorium (41,900) (20,000)
Bad debt (148,200) (70,400)
ROE excess (64,678) (64,678)
Postretirement benefit
obligations (1,001,320) (556,200)
Other (242,698) (256,809)
------------ ------------
Gross deferred tax
assets (1,899,792) (1,348,683)
------------ ------------
Total deferred income
taxes $10,486,502 $11,188,704
============ ============
NOTE 6 - PENSION PLAN:
- ---------------------
Highland Telephone Company, through its defined benefit plan,
provides retirement benefits for substantially all full-time
employees. Qualified employees of Frontier Communications of
AuSable Valley, Inc., Frontier Communications of Seneca Gorham,
Inc. and Frontier Communications of Sylvan Lake, Inc.,
affiliates, are also eligible to participate in the Company's
pension plan.
<PAGE>
<PAGE>
The plan's funded status is as follows:
December 31,
------------------------------
1994 1993 1992
(In thousands of dollars)
Actuarial present value of
benefit obligations:
Vested benefit obligations $17,280 $17,760 $11,497
-------- -------- --------
Accumulated benefit obligations $18,365 $19,097 $12,679
-------- -------- --------
Plan assets at fair value,
primarily common stock $24,672 $25,632 $22,438
Projected benefit obligation 20,260 21,790 16,918
-------- -------- --------
Plan assets in excess of
projected benefit obligation 4,412 3,842 5,520
Unrecognized net loss (gain) 669 639 (1,559)
Unrecognized net transition asset (1,900) (2,134) (2,309)
Unrecognized prior service cost 502 714 905
Regulatory adjustment (2,305) (2,593) (2,866)
(Prepaid) accrued pension (benefit)
cost actuarially allocated to other
participating subsidiaries (75) (62) 26
-------- -------- --------
Net prepaid (accrued) pension
benefit (cost) $ 1,303 $ 406 $ (283)
======== ======== =========
<PAGE>
<PAGE>
Net periodic pension cost consists of the following:
1994 1993 1992
(In thousands of dollars)
Service cost - benefits earned
during the period $ 465 $ 604 $ 647
Interest cost on projected benefit
obligation 1,598 1,492 1,237
Net amortization and deferral (2,838) 400 (245)
Actual return on plan assets 445 (2,618) (1,868)
-------- -------- --------
Net periodic pension cost
determined under FAS 87 (330) (122) (229)
Amount expensed due to regulatory
agency actions (288) (288) 671
Net periodic pension cost
actuarially allocated to other
participating subsidiaries (83) (149) (38)
-------- -------- --------
Net periodic pension (benefit)
cost recognized by Highland
Telephone Company $ (701) $ (559) $ 404
======== ======== ========
The projected benefit obligation at December 31, 1994 was
determined using an assumed discount rate of 8.5% and an assumed
rate of increase in future compensation levels of 5.5%. The
expected weighted average long-term rate of return on assets was
assumed to be 9.0%. The unrecognized net transition asset is
being amortized over 14 years.
The Company's funding policy is to make contributions for pension
benefits based on actuarial computations which reflect the
long-term nature of the pension plan. However, under Financial
Accounting Standards Board Statement No. 87 (FAS 87), "Employers'
Accounting for Pensions," the development of the projected
benefit obligation essentially is computed for financial
reporting purposes and may differ from the actuarial
determination for funding due to varying assumptions and methods
of computation.
<PAGE>
<PAGE>
NOTE 7 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
- ----------------------------------------------------
The Company provides health care, life insurance, and certain
other retirement benefits for substantially all employees.
Effective January 1, 1993, the Company adopted Financial
Accounting Standards Board Statement No. 106 (FAS 106)
"Employers' Accounting for Postretirement Benefits Other than
Pensions." FAS 106 requires that employers reflect in current
expenses an accrual for the cost of providing postretirement
benefits to current and future retirees. Prior to 1993, the
Company recognized these costs as they were paid. The cost of
postretirement benefits was recognized as determined under the
projected unit credit actuarial method.
The funded status of the plans as of December 31, 1994 follows:
1994 1993
Accumulated postretirement
benefit obligation
(APBO) attributable to:
Retirees $ 8,070,000 $ 5,911,000
Fully eligible plan participants 1,458,000 1,491,000
Other active plan participants 4,659,000 4,661,000
----------- -----------
Total APBO 14,187,000 12,063,000
Plan assets at fair value - -
----------- -----------
APBO in excess of plan assets 14,187,000 12,063,000
Unrecognized transition obligation 10,141,000 10,704,000
Unrecognized net (gain) loss 698,824 (230,000)
----------- -----------
Accrued postretirement benefit
obligation $ 3,347,176 $ 1,589,000
=========== ===========
The components of the estimated postretirement benefit cost for
1994 follow:
Service cost $ 402,000 $ 386,000
Interest on accumulated
postretirement benefit obligation 1,064,000 890,000
Amortization of transition
obligation 563,000 563,000
Amortization of gains and losses 215,000 -
Net postretirement benefit cost $2,244,000 $1,839,000
<PAGE>
<PAGE>
To estimate these costs, health care costs were assumed to
increase 11.2% in 1995 with the rate of increase declining
consistently to 5.75% by 2006 and thereafter. The weighted
discount rate and salary increase rate were assumed to be 8.5%
and 5.5%, respectively. If the health care cost trend rates were
increased by one percentage point, the accumulated postretirement
benefit health care obligation as of December 31, 1994 would
increase by $1.6 million while the sum of the service and
interest cost components of the net postretirement benefit health
care cost for 1994 would increase by $200,000.
NOTE 8 - POSTEMPLOYMENT BENEFITS:
- --------------------------------
In 1992, the Financial Accounting Standards Board released
Statement No. 112, "Employers' Accounting for Postemployment
Benefits" (FAS 112), which is required to be implemented by
January 1, 1994. FAS 112 requires that projected future costs of
providing postemployment, but preretirement, benefits, such as
disability, prepension leave (salary continuation) and severance
pay, be recognized as an expense as employees render service
rather than when the benefits are paid.
The Company adopted the provisions of FAS 112 effective January 1,
1994 which resulted in an immaterial effect on the financial
statements.
NOTE 9 - TRANSACTIONS WITH AFFILIATED COMPANIES:
- -----------------------------------------------
The advances/accounts payable - affiliates balance includes
$2,400,000 at December 31, 1994, $13,300,000 at December 31,
1993, and $3,000,000 at December 31, 1992 for funds advanced to
the Company by FC. Interest paid on these funds was $550,900 in
1994, $324,000 in 1993, $119,000 in 1992, respectively. The
remainder of the balance relates primarily to purchases of
supplies and services from FC and other related subsidiaries at
prices considered to be as favorable as those available from
other sources.
In 1993, Frontier Long Distance of New York, Inc. (formerly
Visions Long Distance Company) (FLD), an affiliate of Frontier
Corporation, was established to provide long distance service for
Highland Telephone Company customers. Approximately $5 million
of the December 31, 1994 accounts receivable - affiliates balance
relates to charges for access services, billing and collection
services, and sales and marketing costs paid on behalf of FLD.
In addition, approximately $4.9 million of the accounts payable -
affiliates balance relates to the remittance of amounts billed to
customers by the Company for long distance and cellular services
on behalf of FLD.
<PAGE>
<PAGE>
The Company paid $2,159,819 in 1994; $2,178,302 in 1993, and
$2,441,844 in 1992 to FC for allocated corporate charges
primarily for executive, legal and financial assistance. The
amount due from affiliates relates to customer and administrative
services provided to other subsidiaries of FC. The Company also
paid $2,373,916 to an affiliate, Frontier Information
Technologies (formerly Distributed Solutions, Inc.) for data
processing services during 1994.
Cash and cash equivalents include $779,610, $2,300,000 and
$800,000 in investments held by FC on behalf of the Company at
December 31, 1994, 1993 and 1992, respectively.
NOTE 10 - RATE MORATORIUM:
- -------------------------
Highland Telephone Company finalized a settlement agreement in
1990 with the Public Service Commission providing for an
extension of a rate case moratorium which expired on December 31,
1989. Under the agreement extension, the Company agreed not to
file for a general rate increase that would become effective
prior to January 1, 1992. As part of this moratorium agreement,
the Company was required to defer, for the customer's benefit,
tax savings resulting from the Tax Reform Act of 1986 as well as
the customer's share, under a sharing mechanism, of any earnings
in excess of a threshold percent of equity during 1990 and 1991.
The terms of this agreement expired December 31, 1991, but
$699,186 remains as a deferred credit at December 31, 1994. This
amount will be liquidated in future years subject to guidance and
approval from the Public Service Commission.
NOTE 11 - OPERATING LEASES:
- --------------------------
The Company has noncancellable leases for computer hardware and
office equipment. Minimum annual rental commitments at December 31,
1994 are as follows:
1995 $30,387
1996 17,264
1997 8,434
1998 8,434
Thereafter 3,514
-------
$68,033
=======
Total rental costs were $35,255 for 1994, $341,730 for 1993 and
191,000 for 1992.
<PAGE>
<PAGE>
HIGHLAND TELEPHONE COMPANY
Stock Prices and Dividends Declared
- -----------------------------------
Since the common and preferred stocks of Highland Telephone
Company are not actively traded, neither sales prices nor bid and
asked quotations are readily available.
Quarterly cash dividends per share declared during 1994, 1993 and
1992 were as follows:
<TABLE>
<CAPTION>
Preferred stock
Common stock* Series A - 5-7/8% Series B - 7.8%
--------------------- --------------------------- ------------------
Quarter 1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ -------- -------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First $ 3.16 $ 2.63 $ 2.30 $1.46875 $1.46875 $1.46875 $1.95 $1.95 $1.95
Second 0.00 2.92 2.48 1.46875 1.46875 1.46875 1.95 1.95 1.95
Third 0.00 3.19 2.66 1.46875 1.46875 1.46875 1.95 1.95 1.95
Fourth 9.66 2.96 2.51 1.46875 1.46875 1.46875 1.95 1.95 1.95
------ ------ ------ -------- -------- -------- ----- ----- -----
$12.82 $11.70 $ 9.95 $5.87500 $5.87500 $5.87500 $7.80 $7.80 $7.80
====== ====== ====== ======== ======== ======== ===== ===== =====
* To parent company, Frontier Corporation, all of which shares
are held by such parent.
This report on Form 10(k) is filed pursuant to a partial exemption from the
reporting requirements of the Securities Exchange Act of 1934 approved by the
Division of Corporation Finance of the Securities and Exchange Commission.
</TABLE>
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HIGHLAND TELEPHONE COMPANY
/s/ Jeremiah T. Carr
Date: March 28, 1995 By: ------------------------
Jeremiah T. Carr
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ Ronald L. Bittner
Date: March 28, 1995 By: -------------------------
Ronald L. Bittner
Director
/s/ Jeremiah T. Carr
Date: March 28, 1995 By: --------------------------
Jeremiah T. Carr
President and Chief Executive
Officer and Director
/s/ Louis L. Massaro
Date: March 28, 1995 By: ---------------------------
Louis L. Massaro
Secretary and Director
(and Principal Financial Officer)
Date: March 28, 1995 /s/ Ralph Martucci, Jr.
By: ----------------------------
Ralph Martucci, Jr.
Assistant Treasurer
(and Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM HIGHLAND TELEPHONE COMPANY'S FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000047417
<NAME> HIGHLAND TELEPHONE
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 621,145
<SECURITIES> 0
<RECEIVABLES> 14,831,959
<ALLOWANCES> 0
<INVENTORY> 251,225
<CURRENT-ASSETS> 16,511,545
<PP&E> 104,902,504
<DEPRECIATION> 43,444,579
<TOTAL-ASSETS> 82,217,789
<CURRENT-LIABILITIES> 15,110,202
<BONDS> 8,900,000
<COMMON> 2,280,411
0
2,501,400
<OTHER-SE> 38,892,912
<TOTAL-LIABILITY-AND-EQUITY> 82,217,789
<SALES> 0
<TOTAL-REVENUES> 44,631,983
<CGS> 0
<TOTAL-COSTS> 30,150,634
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 777,924
<INCOME-PRETAX> 13,990,928
<INCOME-TAX> 4,752,600
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,238,328
<EPS-PRIMARY> 17.92
<EPS-DILUTED> 17.92
</TABLE>
