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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: March 23, 1994
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
A New York Commission File I.R.S. Employer
Corporation No. 1-1105 No. 13-4924710
32 Avenue of the Americas, New York, New York 1001 3-2412
Telephone Number (212) 387-5400
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Form 8-K American Telephone and Telegraph Company
March 23, 1994
Item 5. Other Events.
In August, 1993, American Telephone and Telegraph Company ("AT&T") and
McCaw Cellular Communications, Inc. ("McCaw") entered into a definitive
agreement to merge McCaw and a subsidiary of AT&T, making McCaw a wholly
owned subsidiary of AT&T (the "Merger"). The Merger is subject to a number
of conditions, including the receipt of regulatory approvals, expiration of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
("HSR Act"), receipt of opinions that the Merger will be tax free and will
be accounted for as a pooling of interests, and McCaw stockholder approval.
McCaw stockholders holding a majority of the voting power of the McCaw
common stock, including members of the McCaw family and British
Telecommunications plc, have agreed to vote in favor of the Merger.
HSR Act and Antitrust. AT&T and McCaw must observe the notification
and waiting period requirements of the HSR Act before the Merger may be
consummated. The HSR Act provides for an initial 30-calendar day waiting
period following the filing with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the U.S. Department of Justice (the
"Antitrust Division") of certain Notification and Report Forms by the
parties to the Merger and certain other parties.
Following the requisite filings under the HSR Act, AT&T and McCaw each
received an extensive request from the Antitrust Division for additional
information and documents with respect to the Merger and the
telecommunications industry. Accordingly, the waiting period under the HSR
Act has been extended and will not expire until the twentieth calendar day
after AT&T and McCaw have each substantially complied with such request for
additional information and documents. Each of the companies, of AT&T and
McCaw, is responding to the request. The FTC and the Antitrust Division
frequently scrutinize the legality under the antitrust laws of transactions
such as the Merger. At any time before or after the closing of the Merger,
the FTC or the Antitrust Division could, among other things, seek under the
antitrust laws to enjoin the Merger or to cause AT&T to divest itself, in
whole or in part, of McCaw or of other business conducted by AT&T.
In December, 1993, BellSouth Corporation ("BellSouth") filed a motion
in U.S. District Court for a declaratory ruling that the Merger would
violate the antitrust consent decree entered into by AT&T on August 24,
1982 (the "Decree") and cannot be consummated without a modification of the
Decree. AT&T has filed an opposition to the BellSouth motion and has
requested expedited determination of the issues raised by BellSouth's
motion, or, in the alternative, for an expedited waiver of any relevant
Decree provisions. The Antitrust Division has filed responses supporting
BellSouth's interpretation of the Decree and opposing on the then existing
record AT&T's request for a waiver.
AT&T is not required to consummate the Merger if any court or
governmental or regulatory authority of competent jurisdiction enjoins the
Merger or imposes any condition or restriction on its consummation
unacceptable to AT&T in its reasonable judgment.
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Form 8-K American Telephone and Telegraph Company
March 23, 1994
Federal Communications Commission ("FCC"). In August, 1993, AT&T and
Craig O. McCaw filed various applications seeking consent of the FCC to the
proposed transfer of control of McCaw to AT&T, which consent is required
prior to consummation of the Merger. Several parties, including
competitors of McCaw and/or AT&T, have filed petitions with the FCC
opposing the request for FCC consent or seeking to impose conditions on the
Merger. The applications for consent are now pending before the FCC.
State Governmental Authorities. Pursuant to requirements of various
statutes, AT&T and McCaw filed applications with nine state regulatory
commissions seeking approval and/or a statement of nonopposition to the
Merger. Such applications were granted in all states except California.
In California, AT&T and McCaw have reached settlement with certain opposing
parties, but other parties have filed objections opposing approval of the
California settlement. The matter is now pending before the California
Commission.
There can be no assurance that the court or regulatory actions
requested by AT&T will be granted or granted without unacceptable
conditions, or that other challenges to the Merger will not be made on
antitrust grounds.
* * * * *
Three bills have been introduced into Congress that concern the
telecommunications industry, two in the House of Representatives and one in
the Senate. One of the House bills, H.R. 3626, establishes the FCC and
U.S. Department of Justice tests the Regional Bell Operating Companies
("RBOCs") must meet before they can provide long distance service. These
tests vary with the segment of the long distance market the RBOC seeks to
enter. This bill also outlines the conditions for RBOC entry into
manufacturing of telecommunications equipment.
The second House bill, H.R. 3636, would require local telephone
companies ("LECs") to provide interconnection equal access to their
exchanges. In exchange, the LECs will be permitted to provide cable
television services.
The Senate bill, S. 1822, combines many of the features of the House
bills. It includes a test which the RBOCs must meet before they would be
permitted to provide long distance service. This test requires that there
"be no substantial possibility the RBOC could use its monopoly power to
impede competition" in the market it seeks to enter. In areas where the
RBOC provides local service, they must also prove that they face "actual
and demonstrable competition" before they could offer long distance
service. S. 1822 would also permit the RBOCs into manufacturing
immediately, but such activities would be subject to extensive post-entry
safeguards. Finally, like H.R. 3636, S. 1822 would permit the LECs to
enter the cable television market, but only in exchange for allowing
competitors into their local service market.
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Form 8-K American Telephone and Telegraph Company
March 23, 1994
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number
-------
12 Computation of Ratio of Earnings to Fixed Charges.
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Form 8-K American Telephone and Telegraph Company
March 23, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
American Telephone and Telegraph Company
By S. L. Prendergast
Vice President and Treasurer
March 23, 1994
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Form 8-K American Telephone and Telegraph Company
March 23, 1994
Exhibit Index
Exhibit Number
- --------------
12 Computation of Ratio of Earnings to Fixed Charges.
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Form 8-K Exhibit (12)
March 23, 1994
AMERICAN TELEPHONE AND TELEGRAPH COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
(Unaudited)
For the Year Ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Earnings Before Income
Taxes $6,204 $5,958 $ 883 $4,879 $4,731
Less Interest Capitalized
During the Period 72 62 79 79 89
Less Undistributed
Earnings of Less Than
50% Owned Affiliates (16) 23 49 39 31
Add Fixed Charges 1,528 1,621 1,781 1,864 1,400
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Total Earnings $7,676 $7,494 $2,536 $6,625 $6,011
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Fixed Charges
Total Interest Expense
Including Capitalized
Interest $1,181 $1,247 $1,294 $1,267 $ 997
Interest Portion of
Rental Expenses 347 374 487 597 403
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Total Fixed
Charges $1,528 $1,621 $1,781 $1,864 $1,400
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Ratio of Earnings to
Fixed Charges 5.0 4.6 1.4 3.6 4.3
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