<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13, or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
---------------
Commission File Number 1-8609
PACIFIC TELESIS GROUP
---------------
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for the fiscal
year ended December 31, 1993 on Form 10-K as set forth in the pages attached
hereto:
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Pacific Telesis Group
Dated June 16, 1994 By /s/ William E. Downing
----------------------------
William E. Downing
Executive Vice President,
Chief Financial Officer and
Treasurer
<PAGE>
"Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K."
is hereby amended to add the following exhibits under the heading "(3)
Exhibits:"
Exhibit
Number Description
------- -------------------------------------------------------
23a Consent of Coopers & Lybrand.
99a Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried
Employees for the year 1993.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried
Employees for the year 1993.
99c Annual report on Form 11-K for the PacTel Corporation
Retirement Plan for the year 1993.
2
<PAGE>
EXHIBIT INDEX
Exhibits identified in parentheses below, on file with the SEC, are
incorporated herein by reference as exhibits hereto.
Exhibit
Number Description
------- ------------------------------------------------------
23a Consent of Coopers & Lybrand.
99a Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried
Employees for the year 1993.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried
Employees for the year 1993.
99c Annual report on Form 11-K for the PacTel Corporation
Retirement Plan for the year 1993.
3
Exhibit 23a
Form 10-K for 1993
File No. 1-8609
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Pacific Telesis Group as follows:
Form S-3: PacTel Capital Resources $500,000,000 Debt Securities and
Guarantee thereof by Pacific Telesis Group
Form S-3: Secondary Offering of 137,504 shares of Pacific Telesis Group
Common Stock
Form S-3: Shareowner Dividend Reinvestment and Stock Purchase Plan
Form S-4: ABI American Businessphones, Inc. Merger
Form S-8: Nonemployee Director Stock Option Plan
Form S-8: Supplemental Retirement and Savings Plan for Salaried Employees
Form S-8: Supplemental Retirement and Savings Plan for Nonsalaried
Employees
Form S-8: Stock Option and Stock Appreciation Rights Plan
Form S-8: PacTel Corporation Retirement Plan
of our reports dated May 17, 1994 on our audits of the financial statements of
the Pacific Telesis Group Supplemental Retirement and Savings Plan for
Salaried Employees, Pacific Telesis Group Supplemental Retirement and Savings
Plan for Nonsalaried Employees and our report dated May 27, 1994 on our audit
of the PacTel Corporation Retirement Plan as of December 31, 1993 and 1992 and
for each of the three years in the period ended December 31, 1993 and the
accompanying supplemental schedules of assets held for investment purposes and
reportable transactions as of December 31, 1993, filed as part of Exhibits
99a, 99b and 99c, respectively, to the Annual Report on Form 10-K of Pacific
Telesis Group for the year ended December 31, 1993.
/s/ Coopers & Lybrand
San Francisco, California
June 16, 1994
<PAGE>
Exhibit 99a
Form 10-K for 1993
File No. 1-8609
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-8609
---------------
PACIFIC TELESIS GROUP
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
---------------
PACIFIC TELESIS GROUP
130 Kearny Street, San Francisco, California 94108
<PAGE>
TABLE OF CONTENTS
Description
-----------
Item Page
---- ----
1. Financial Statements and Exhibits . . . . . . . . . . . . . . 3
2
<PAGE>
Item 1. Financial Statements and Exhibits
(a) Financial Statements of the Plan included herein:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Plan Benefits -
December 31, 1993 and 1992
Statements of Changes in Net Assets Available for Plan
Benefits For the Years Ended December 31, 1993, 1992 and
1991
Notes to Financial Statements
Schedules:
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
Other schedules are omitted because the information
required is contained in the Financial Statements.
(b) Exhibits:
None
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Savings Plans Committee
Pacific Telesis Group Supplemental Retirement
and Savings Plan for Salaried Employees:
We have audited the accompanying statements of net assets available for plan
benefits of the Pacific Telesis Group Supplemental Retirement and Savings Plan
for Salaried Employees as of December 31, 1993 and 1992, and the related
statements of changes in net assets available for plan benefits for each of
the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried
Employees at December 31, 1993 and 1992, and the changes in net assets
available for plan benefits for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions as of December 31,
1993 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to
present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
As discussed in Note 2 to the financial statements, the Plan changed its
method of accounting for distributions payable.
/s/ Coopers & Lybrand
San Francisco, California
May 17, 1994
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993
(Dollars in thousands)
<CAPTION>
Company Interest
Stock Equity Income Bond
ASSETS: Fund Fund Fund Fund
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Investments at fair value (cost $1,067,378)
Pacific Telesis Group common shares $579,230 $ - $ - $ -
State Street S&P 500 Fund - 294,902 - -
State Street Long Bond Fund - - - 33,884
State Street Money Market Fund - - - -
State Street Balanced Fund - - - -
Contracts with insurance companies and banks - - 224,694 -
Short-term investments 2,772 1,047 8,159 101
---------- ---------- ----------- ----------
Total Investments 582,002 295,949 232,853 33,985
Employee contribution receivable 1,422 1,452 2 206
Fund and other transfers receivable - net 3,833 3 1 -
Dividends and interest receivable 5,823 1 1,473 -
Receivable for investments sold - - 15,778 -
---------- ---------- ----------- ----------
Total Assets 593,080 297,405 250,107 34,191
---------- ---------- ----------- ----------
LIABILITIES:
Fund and other transfers payable - net - 2,319 2,195 152
Payable for investments purchased - - 197 -
Fees payable 75 43 39 5
---------- ---------- ----------- ----------
Total Liabilities 75 2,362 2,431 157
---------- ---------- ----------- ----------
Net assets available for Plan benefits $593,005 $295,043 $247,676 $34,034
========== ========== =========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993
(Dollars in thousands)
<CAPTION>
Money
Market Balanced Grand
ASSETS: Fund Fund Total
---------- ----------- ----------
<S> <C> <C> <C>
Investments at fair value (cost $1,067,378)
Pacific Telesis Group common shares $ - $ - $ 579,230
State Street S&P 500 Fund - - 294,902
State Street Long Bond Fund - - 33,884
State Street Money Market Fund 53,641 - 53,641
State Street Balanced Fund - 185,816 185,816
Contracts with insurance companies and banks - - 224,694
Short-term investments 150 310 12,539
---------- ----------- ----------
Total Investments 53,791 186,126 1,384,706
Employee contribution receivable 484 1,062 4,628
Fund and other transfers receivable - net - 1,049 4,886
Dividends and interest receivable 210 - 7,507
Receivable for investments sold - - 15,778
---------- ----------- ----------
Total Assets 54,485 188,237 1,417,505
---------- ----------- ----------
LIABILITIES:
Fund and other transfers payable - net 194 - 4,860
Payable for investments purchased 209 - 406
Fees payable 8 25 195
---------- ----------- ----------
Total Liabilities 411 25 5,461
---------- ----------- ----------
Net assets available for Plan benefits $54,074 $188,212 $1,412,044
========== =========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
6
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1992
(Dollars in thousands)
<CAPTION>
Diversified Diversified
Company Telephone Government Equity
Stock Portfolio Obligation Portfolio Equity
ASSETS: Fund Fund Fund Fund Fund
----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments at fair value (cost $1,020,977)
Pacific Telesis Group common shares $443,093 $ - $ - $ - $ -
State Street S&P 500 Fund - - - - 263,945
State Street Long Bond Fund - - - - -
State Street Money Market Fund - - - - -
State Street Balanced Fund - - - - -
Contracts with insurance companies and banks - - - - -
Short-term investments 435 - - - -
----------- ---------- ---------- ----------- ----------
Total Investments 443,528 - - - 263,945
Employee contribution receivable (Forfeiture credits) 909 - (2) - 1,339
Fund and other transfers receivable - net 767 - 2 - 667
Dividends and interest receivable 5,451 - - - -
----------- ---------- ---------- ----------- ----------
Total Assets 450,655 - - - 265,951
----------- ---------- ---------- ----------- ----------
LIABILITIES:
Distributions payable (Note 2) - - - - -
Fund and other transfers payable - net - - - - -
Payable for investments purchased - - - - -
Fees payable 18 - - - 13
----------- ---------- ---------- ----------- ----------
Total Liabilities 18 - - - 13
----------- ---------- ---------- ----------- ----------
Net assets available for Plan benefits $450,637 $ - $ - $ - $265,938
=========== ========== ========== =========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
7
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1992
(Dollars in thousands)
<CAPTION>
Interest Money
Income Bond Market Balanced Grand
ASSETS: Fund Fund Fund Fund Total
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investments at fair value (cost $1,020,977)
Pacific Telesis Group common shares $ - $ - $ - $ - $ 443,093
State Street S&P 500 Fund - - - - 263,945
State Street Long Bond Fund - 31,474 - - 31,474
State Street Money Market Fund - - 49,780 - 49,780
State Street Balanced Fund - - - 145,648 145,648
Contracts with insurance companies and banks 240,519 - - - 240,519
Short-term investments 22,701 - - 207 23,343
----------- ---------- ---------- ---------- -----------
Total Investments 263,220 31,474 49,780 145,855 1,197,802
Employee contributions receivable (Forfeiture credits) (21) 203 545 982 3,955
Fund and other transfers receivable - net - 493 - 1,633 3,562
Dividends and interest receivable 1,787 - 190 - 7,428
----------- ---------- ---------- ---------- -----------
Total Assets 264,986 32,170 50,515 148,470 1,212,747
----------- ---------- ---------- ---------- -----------
LIABILITIES:
Distributions payable (Note 2) - - - - -
Fund and other transfers payable - net 2,558 - 1,120 - 3,678
Payable for investments purchased 1 - 190 - 191
Fees payable 10 4 4 4 53
----------- ---------- ---------- ---------- -----------
Total Liabilities 2,569 4 1,314 4 3,922
----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $262,417 $32,166 $49,201 $148,466 $1,208,825
=========== ========== ========== ========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
8
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Company Interest
Stock Equity Income Bond
Fund Fund Fund Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1993,
as previously reported $447,626 $264,989 $260,281 $ 32,040
Add: Adjustment for the cumulative effect on prior years of
applying retroactively the new method of accounting for
distributions payable (Note 2) 3,011 949 2,136 126
----------- ----------- ----------- -----------
Net assets available for Plan benefits, January 1, 1993,
as adjusted 450,637 265,938 262,417 32,166
----------- ----------- ----------- -----------
Employee contributions 19,058 19,698 16 2,841
Investment income:
Dividends on Pacific Telesis Group common shares 22,523 - - -
Other dividends - 1 - -
Interest 60 6 18,245 1
Net appreciation (depreciation) of investments (Note 6) 100,499 27,312 - 3,116
Transfers of participants' balances, net 23,500 (7,369) (21,288) (2,643)
----------- ----------- ----------- -----------
Total Additions (Deductions), net 165,640 39,648 (3,027) 3,315
Less: Distributions to participants (Note 2) 22,942 10,328 11,525 1,411
Fees 330 215 189 36
----------- ----------- ----------- -----------
Net increase (decrease) 142,368 29,105 (14,741) 1,868
----------- ----------- ----------- -----------
Net assets available for Plan benefits, December 31, 1993 $593,005 $295,043 $247,676 $ 34,034
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
9
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Money
Market Balanced Grand
Fund Fund Total
----------- ----------- -----------
<S> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1993,
as previously reported $ 48,814 $147,821 $1,201,571
Add: Adjustment for the cumulative effect on prior years of
applying retroactively the new method of accounting for
distributions payable (Note 2) 387 645 7,254
----------- ----------- -----------
Net assets available for Plan benefits, January 1, 1993,
as adjusted 49,201 148,466 1,208,825
----------- ----------- -----------
Employee contributions 7,229 14,264 63,106
Investment income:
Dividends on Pacific Telesis Group common shares - - 22,523
Other dividends - - 1
Interest 1,825 4 20,141
Net appreciation (depreciation) of investments (Note 6) - 19,926 150,853
Transfers of participants' balances, net (923) 12,331 3,608
----------- ----------- -----------
Total Additions (Deductions), net 8,131 46,525 260,232
Less: Distributions to participants (Note 2) 3,206 6,649 56,061
Fees 52 130 952
----------- ----------- -----------
Net increase (decrease) 4,873 39,746 203,219
----------- ----------- -----------
Net assets available for Plan benefits, December 31, 1993 $ 54,074 $188,212 $1,412,044
=========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
10
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992
(Dollars in thousands)
<CAPTION>
Diversified Diversified
Company Telephone Government Equity
Stock Portfolio Obligations Portfolio Equity
Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1992,
as previously reported $509,437 $ 104,229 $ 83,502 $ 188,656 $ -
Add: Adjustment for the cumulative effect on prior years of
applying retroactively the new method of accounting for
distributions payable (Note 2) 24,578 4,061 3,763 7,517 -
----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits, January 1, 1992,
as adjusted 534,015 108,290 87,265 196,173 -
----------- ----------- ----------- ----------- -----------
Employee contributions 21,465 - 2,274 7,013 8,014
Investment income:
Dividends on Pacific Telesis Group common shares 22,244 196 - - -
Other dividends - 2,339 - - -
Interest 361 97 3,125 3,056 2
Net appreciation (depreciation) of investments (Note 6) (8,699) (2,899) (128) (1,703) 17,651
Transfers of participants' balances, net (42,710) (96,350) (82,466) (183,359) 246,350
----------- ----------- ----------- ----------- -----------
Total Additions (Deductions), net (7,339) (96,617) (77,195) (174,993) 272,017
Less: Distributions to participants (Note 2) 75,998 11,666 10,055 21,162 6,048
Fees 41 7 15 18 31
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (83,378) (108,290) (87,265) (196,173) 265,938
----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits,
December 31, 1992, as adjusted $450,637 $ - $ - $ - $265,938
=========== =========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
11
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992
(Dollars in thousands)
<CAPTION>
Interest Money
Income Bond Market Balanced Grand
Fund Fund Fund Fund Total
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1992.
as previously reported $294,798 $ - $ - $ - $1,180,622
Add: Adjustment for the cumulative effect on prior years of
applying retroactively the new method of accounting for
distributions payable (Note 2) 13,717 - - - 53,636
----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits, January 1, 1992,
as adjusted 308,515 - - - 1,234,258
----------- ---------- ---------- ---------- -----------
Employee contributions 7,999 1,164 3,490 5,837 57,256
Investment income:
Dividends on Pacific Telesis Group
common shares - - - - 22,440
Other dividends - - - - 2,339
Interest 22,629 1 468 3 29,742
Net appreciation (depreciation) of investments (Note 6) - 1,034 - 5,476 10,732
Transfers of participants' balances, net (35,611) 30,704 47,076 139,684 23,318
----------- ---------- ---------- ---------- -----------
Total Additions (Deductions), net (4,983) 32,903 51,034 151,000 145,827
Less: Distributions to participants (Note 2) 41,032 737 1,808 2,534 171,040
Fees 83 - 25 - 220
----------- ---------- ---------- ---------- -----------
Net increase (decrease) (46,098) 32,166 49,201 148,466 (25,433)
----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits,
December 31, 1992, as adjusted $262,417 $32,166 $49,201 $148,466 $1,208,825
=========== ========== ========== ========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
12
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1991
(Dollars in thousands)
<CAPTION>
Pacific Diversified Diversified
Telesis Telephone Government Equity Guaranteed
Group Portfolio Obligations Portfolio Interest
Shares Fund Fund Fund Fund Fund Total
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for Plan benefits,
January 1, 1991, as previously reported $564,644 $117,381 $65,090 $123,225 $249,917 $1,120,257
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the new method
of accounting for distributions payable (Note 2) 6,333 1,662 775 1,125 4,010 13,905
----------- ----------- ----------- ---------- ---------- -----------
Net assets available for Plan benefits,
January 1, 1991, as adjusted 570,977 119,043 65,865 124,350 253,927 1,134,162
----------- ----------- ----------- ---------- ---------- -----------
Employee contributions 35,683 - 3,731 9,868 17,350 66,632
Investment income:
Dividends on Pacific Telesis Group common shares 26,026 567 - - - 26,593
Other dividends - 4,877 - - - 4,877
Interest 304 54 5,567 4,942 23,596 34,463
Net appreciation (depreciation) of
investments (Note 6) (9,140) 5,273 2,426 34,531 - 33,090
Transfers of participants' balances, net (58,405) (13,933) 13,644 29,453 29,873 632
----------- ----------- ----------- ----------- ---------- -----------
Total Additions (Deductions), net (5,532) (3,162) 25,368 78,794 70,819 166,287
Less: Distributions to participants (Note 2) 31,396 7,578 3,934 6,928 16,110 65,946
Fees 34 13 34 43 121 245
----------- ----------- ----------- ----------- ---------- -----------
Net increase (decrease) (36,962) (10,753) 21,400 71,823 54,588 100,096
----------- ----------- ----------- ----------- ---------- -----------
Net assets available for Plan benefits,
December 31, 1991, as adjusted $534,015 $108,290 $87,265 $196,173 $308,515 $1,234,258
=========== =========== =========== =========== ========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
13
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
The following description of the Pacific Telesis Group Supplemental
Retirement and Savings Plan for Salaried Employees (the "Plan") provides
only general information. For a more complete description of the Plan's
provisions, including the income tax consequences of receiving
distributions from the Plan, participants should refer to the plan
documents or the prospectus and summary plan description dated January
1991, as amended.
A. General
The Plan was established by Pacific Telesis Group (the "Corporation") to
provide a convenient way for eligible employees to save on a regular and
long-term basis and to supplement retirement income. The Plan and the
Pacific Telesis Group Supplemental Retirement and Savings Plan for
Nonsalaried Employees incorporate a leveraged employee stock ownership
plan called the Pacific Telesis Group Supplemental Retirement and Savings
Plan for Salaried and Nonsalaried Employees-Leveraged ESOP (the "LESOP")
to provide for company matching allocations. The LESOP allows the Plan to
borrow money to purchase Pacific Telesis Group shares, which are held
initially in a suspense account under the Plan. As the Plan pays off the
loan with company contributions, shares are released from the suspense
account and allocated to employees' accounts.
B. Employee Contributions and Employing Company Matching Allocations
Employee Contributions - Salaried employees of the Corporation and its
participating subsidiaries (the "Employing Company") are eligible to
participate in the Plan after completing one year of service. Eligible
employees may authorize a basic deduction of up to 6% of salary in 1%
increments. If the employee has authorized the maximum basic deduction of
6%, a supplemental deduction may also be authorized which, when added to
the basic deduction of 6%, results in a total deduction of not more than
16% of salary. Basic and supplemental deductions may be made on an after-
tax or before-tax basis, as elected by the employee. The employee may
change the rate of employee deductions as of the first payroll period
ending in any month subject to a maximum of three elections per year. The
election must be made at least five days before the beginning of any month
to be effective for that month.
Employee deductions on a before-tax basis are limited to an annual
maximum, adjusted for inflation ($9,240 for 1994, $8,994 for 1993 and
$8,728 for 1992). Salary eligible for deductions is limited to an annual
maximum, adjusted for inflation ($150,000 for 1994, $235,840 for 1993 and
$228,860 for 1992).
Employing Company Matching Allocations - Each participant receives a
"matching" allocation equal to 66-2/3% of the employee's basic deductions.
A matching allocation is not made with respect to supplemental deductions.
14
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
The matching allocation is made to the Savings Match Stock account under
the LESOP.
Rollover Contributions - Salaried employees with less than one year of
service may elect to roll over a distribution from another qualified plan
to the Plan prior to the time the employee becomes an eligible employee.
Participants who retire and elect a cashout from the Pacific Telesis Group
Pension Plan for Salaried Employees may roll over the cashout to the Plan.
The amount rolled over will be credited to the employee's account as of
the last day of the month in which the rollover was received.
C. Investment Directions
Employees may elect that their payroll deductions be invested in any of
the following funds, in 10% increments, with elections totalling 100%.
(a) the Company Stock Fund;
(b) the Equity Fund;
(c) the Bond Fund;
(d) the Money Market Fund;
(e) the Balanced Fund.
Employing Company matching allocations under the LESOP are invested only
in Pacific Telesis Group shares.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
The Corporation amended the Plan effective July 1, 1992 to offer three new
investment options, namely the Bond Fund, the Money Market Fund, and the
Balanced Fund, and to rename three funds, namely the Guaranteed Interest
Fund, the Diversified Equity Portfolio Fund, and the Pacific Telesis Group
Shares Fund as the Interest Income Fund, the Equity Fund, and the Company
Stock Fund, respectively. In addition, two investment options - the
Government Obligations Fund and the Diversified Telephone Portfolio Fund -
were liquidated and their remaining account balances transferred into the
Money Market Fund and the Company Stock Fund, respectively, unless
elections were made by employees to direct their funds into other
available investment options. The Interest Income Fund was closed to new
contributions and investment transfers as of June 30, 1992.
Once in any three-month period, participants can transfer all or a portion
of their investment in an investment fund to another permitted investment
fund or combination of investment funds. Transfers may be made by
telephoning PIN (Participant Inquiry Network) on or before the effective
date of transfer (last day of the month). Participants may make transfers
among certain funds in 5% increments. However, Pacific Telesis Group
shares held in the LESOP are not transferable to the Plan's investment
funds.
Effective March 31, 1994, the Corporation has amended the Plan to add a
new investment fund, the AirTouch Stock Fund. This new fund will be
established upon the separation of PacTel Corporation from Pacific Telesis
Group on April 1, 1994, and will consist of AirTouch common shares
attributable to the shares of Pacific Telesis Group held in the Company
Stock Fund and AirTouch common shares transferred from the LESOP. The
Plan will allow fund transfers out of the AirTouch Stock Fund to any other
investment fund option, except the Interest Income Fund, as of the end of
any month. The once-every-three-months transfer limit described above
will continue to apply to the other investment funds. The AirTouch Stock
Fund will be closed to new contributions and investment transfers after
March 31, 1994.
D. Vesting and Forfeitures
Employee deduction accounts are always fully vested and nonforfeitable.
Employing Company matching accounts (the Savings Plan's matching account
and the LESOP's Savings Match Stock account) attributable to employees'
before-tax basic deductions are also fully vested and nonforfeitable.
Employing Company matching accounts attributable to employees' after-tax
basic deductions are fully vested after a participant either completes
three years of service or reaches age 65 while employed. Such accounts
are also fully vested upon termination of employment due to retirement,
disability, death, termination under certain severance pay plans, or
termination due to a layoff.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
The nonvested portion of the Employing Company matching accounts
attributable to after-tax deductions is forfeited upon termination of
employment or withdrawal of after-tax basic deductions made in the current
or two preceding years. Generally, an employee may restore any forfeiture
caused by a withdrawal or distribution by making a lump sum payment within
five years equal to the portion of the distribution or withdrawal
attributable to after-tax deductions and related Employing Company
matching allocations. Forfeitures are automatically restored if the
employee did not receive a distribution upon termination of employment and
is reemployed within five years. Forfeitures from the LESOP's Savings
Match Stock Accounts are applied toward subsequent matching allocations,
and forfeitures, if any, arising from the Savings Plan's matching account
are applied to pay trustee fees.
E. Withdrawals and Distributions
In-Service Withdrawals - Once in any six-month period, a participant while
still employed may elect to withdraw all or part of his or her account as
follows:
o The value of after-tax supplemental deductions (and post-1986
earnings), after-tax basic deductions (and post-1986 earnings) made
more than two calendar years before the year of withdrawal, after-tax
vested Employing Company matching allocations made more than two
calendar years before the year of withdrawal, and rollover
contributions may be withdrawn without penalty. The value of after-
tax basic deductions made in the current and two preceding plan years
may be withdrawn only in a total withdrawal of all available after-tax
accounts. If a total withdrawal is made, the value of any nonvested
Employing Company matching allocations will be forfeited and Employing
Company matching allocations will be suspended for six months
following the withdrawal date. However, employee deductions may
continue during the suspension period. A partial withdrawal must be a
minimum of $300 and a multiple of $50. Employees do not need to
specify the actual dollar amount of a total withdrawal of after-tax
accounts.
17
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
o The value of before-tax deductions and before-tax Employing Company
matching allocations may be withdrawn, in total or in a partial
withdrawal of at least $300 and a multiple of $50, by employees who
have attained age 59-1/2. However, such withdrawals may not be made
by employees who have not yet attained age 59-1/2, except in the event
of a hardship which is created by the purchase cost of a primary
residence, current year expenses of post-secondary education, eviction
or foreclosure on a principal residence, unreimbursed medical
expenses, and certain federal and state income taxes attributable to
post-1991 hardship withdrawals. The employee must demonstrate that no
other resources are available to meet the need, and the reason given
and amount requested must be approved by the Savings Plans Committee.
A hardship withdrawal must be at least $300 and a multiple of $50.
Post-1988 earnings on employee before-tax deductions are not available
for hardship withdrawal.
Distribution upon Termination of Employment - A participant who has
terminated employment is entitled to a distribution of his or her vested
accounts as follows:
o If the employee terminated employment for reasons other than
retirement on a service pension or disability, the employee may elect
to receive a distribution in a single sum payment at any time between
termination and attainment of age 65. However, if the employee's
vested account has a value of less than $3,500, the account is
distributed automatically following termination of employment.
o If the employee terminates employment on account of retirement on a
service pension or disability, the employee may elect to receive a
distribution in a single sum payment or in annual installments over a
period of years not to exceed the employee's life expectancy,
commencing at any time between termination of employment and April 1
following the attainment of age 70-1/2. Participants on leaves of
absence after expiration of short-term disability benefits are treated
as though their employment terminated and they are eligible for a
distribution.
o Effective January 1, 1993, an employee who terminates for any reason
may elect to transfer all or part of his or her account, except for
the amount of the employee's after-tax contributions and distributions
required after age 70-1/2, from the Plan to another qualified plan in
a trustee to trustee transfer or within 60 days to an Individual
Retirement Arrangement or other qualified plan, in lieu of receiving a
lump sum distribution.
18
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Distributions Upon Death - The designated beneficiary or beneficiaries of
participants who die before the effective date of the distribution will
receive the entire amount of their vested accounts, as soon as practicable
after the participant's death, in a single sum payment or in two annual
installments (if the participant so elected before 1985). Effective
June 1, 1992, a beneficiary may elect a single sum payment in lieu of the
installment method.
Age 70-1/2 Distributions During Employment - Employees who remain employed
after attaining age 70-1/2 will automatically receive distributions in
annual installments beginning not later than April 1 of the following
year.
Form of Payment - Distributions as well as withdrawals are valued as of
the end of the month in which they are requested (some exceptions apply).
Withdrawals and distributions are made in cash, except a participant or
beneficiary may choose to receive cash or shares from amounts invested in
the Company Stock Fund or the LESOP. Effective March 31, 1994, a
participant or beneficiary may also choose to receive cash or shares from
amounts invested in the AirTouch Stock Fund.
F. Tax Consequences of Participation
Employees may designate their basic and supplemental deductions as before-
tax or after-tax, or as a combination of both. The before-tax basic and
supplemental deductions are intended as contributions under a salary
deferral arrangement qualified under Section 401(k) of the Internal
Revenue Code. Under such an arrangement, the employee's before-tax
deductions are considered a reduction in taxable compensation and are
treated as employer contributions to the Plan (rather than employee
contributions). Before-tax deductions reduce the employee's W-2
compensation for federal income tax purposes and for the income tax
purposes of California and most other states. However, withdrawals of
before-tax contributions are subject to severe restrictions while the
employee is in-service (see "Withdrawals and Distributions").
Employees will not have taxable income as a result of Employing Company
contributions (including the employee's before-tax deductions that are
treated as employer contributions or allocations) or earnings on Plan
assets before the amounts are distributed from the Plan. When a
participant receives a distribution from the Plan other than in a direct
rollover transfer, the distribution may be partially or fully subject to
federal and state income taxes depending on the extent it represents a
return of the employee's after-tax contributions and on whether the
participant has elected to receive shares of appreciated stock.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
In addition to any regular income tax that may be due, a 10% additional
federal tax (and a similar 2-1/2% additional California tax) generally
applies to taxable distributions received prior to age 59-1/2. However,
the taxable portion of certain eligible distributions may be rolled over
to an Individual Retirement Arrangement or other qualified plan within 60
days following distribution or, effective January 1, 1993, directly from
the Plan in a trustee to trustee transfer, in which case any current
regular income tax and additional tax will be avoided. Five-or ten-year
averaging may be available in some circumstances to determine the income
tax on the taxable portion of a lump sum distribution, but only if no part
of the distribution is rolled over.
The preceding general discussion does not cover all tax aspects of
participation in the Plan. Participants should refer to the current
prospectus and summary plan description for additional information on the
income and estate tax consequences of withdrawals and distributions from
the Plan. As the tax laws are complex and frequently change, participants
or beneficiaries should consult a qualified tax advisor to obtain current
information as well as advice that is tailored to their particular
circumstances.
2. Summary of Accounting Policies
------------------------------
Investments are carried at their estimated fair values determined as
follows:
o Pacific Telesis Group common shares in the Company Stock Fund and the
LESOP are valued at the last published sales prices at the end of each
Plan year as reported on the composite tape of the New York Stock
Exchange.
o The Plan's investments in the Bond Fund, Money Market Fund, Balanced
Fund, and Equity Fund are stated at the fair values of the total units
of participation held by the Plan in each of these trust funds. The
fair values of the units of participation held by the Plan are
established by Bankers Trust Company, the Plan's trustee, and reflect
the market values of each fund's underlying assets, as reported by the
investment manager, State Street Asset Management, a subsidiary of
State Street Bank and Trust. The Bond Fund invests primarily in long-
term obligations, including U.S. Government and government agency
debts, and corporate bonds; the Money Market Fund invests primarily in
short-term debts of U.S. Government agencies and corporations; the
Balanced Fund invests in a predetermined mix of large U.S. and
international company stocks, high quality bonds, and money market
instruments; the Equity Fund invests primarily in a broad mix of U.S.
company common stocks.
20
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
o The Plan's investments in the Interest Income Fund are valued at the
amount of contributed principal plus reinvested interest less
distributions. The Interest Income Fund invests in contracts with
insurance companies, banks or other financial institutions, savings
accounts, certificates of deposit, obligations of the United States
government or other credit worthy organizations, commercial paper,
corporate bond or other debt obligations, as well as other fixed
income investments (subject to any guidelines adopted by the
Corporation) which guarantee by agreement the repayment of principal
plus interest.
In accordance with the policy of stating investments at fair value, net
unrealized appreciation (depreciation), in addition to realized gains and
losses, is included in the net change in appreciation (depreciation) of
investments presented in the accompanying financial statements, where
appropriate for the asset being valued.
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
Purchases and sales of securities are reflected as of the trade date.
Amounts allocated to accounts of participants who have elected to withdraw
from the Plan but who were not paid as of the year-end are included in net
assets available for benefits. In 1992 and prior years, these amounts
were reflected as distributions payable in the statement of net assets
available for plan benefits and as distributions to participants in the
statement of changes in net assets available for plan benefits. In 1993,
the American Institute of Certified Public Accountants (AICPA) established
a new guideline for the treatment of these amounts. The new guideline
states that the Plan should not reflect these amounts as a liability on
the statement of net assets. The 1992 statement of net assets available
for plan benefits and the 1992 and 1991 statements of changes in net
assets available for plan benefits have therefore been restated to
retroactively reflect this accounting change. The effect of the
restatement was to reduce the benefits payable and increase net assets
available for plan benefits by $7,254,000 and $53,636,000 for 1992 and
1991, respectively.
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
The Department of Labor requires these amounts to be reported as a
liability on the Form 5500. The following reconciles net assets available
for benefits between these financial statements and the Form 5500 as of
December 31 (dollars in thousands):
1993 1992
------------ -------------
Net assets available for plan
benefits per financial statements $1,412,044 $1,208,825
Benefits due for participant
withdrawal/distribution (10,432) (7,254)
------------ ------------
Net assets available for Plan
benefits per Form 5500 $1,401,612 $1,201,571
============ ============
Similarly, the 1993 distributions to participants amount reflected in the
statement of changes in net assets available for benefits is reconciled to
the Form 5500 as follows (dollars in thousands):
1993
--------------
Distributions to participants per
financial statements $56,061
Benefits due:
Beginning of year (7,254)
End of year 10,432
--------------
Distributions to participants per Form 5500 $59,239
==============
Additionally, certain reclassifications have been made in the 1992 statement
of net assets for Plan benefits to conform to the presentation used in 1993.
There was no impact on previously reported net assets available for plan
benefits other than the retroactive restatement resulting from the change in
accounting principle noted above.
3. Participant Accounts
--------------------
Employee deductions are credited to the employee's before-tax basic
account, before-tax supplemental account, after-tax basic account and
after-tax supplemental account, as appropriate. Employer matching
contributions made for periods before March 1, 1990 were credited to the
employees' after-tax company account and before-tax company account, as
appropriate.
22
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts (Continued)
-------------------------------
An employee's interest in the accounts is represented by units of
participation ("Units") in each investment fund in which the employee
participates. Monthly, a participant's account is credited with Units in
each fund to which the participant's payroll deductions have been
directed. The number of Units credited is based upon each respective
fund's current Unit value which is determined as of the end of each month.
A fund's Unit value is based upon the fair value of the underlying assets
and will reflect any unrealized appreciation or depreciation of the fund's
assets. The determination of monthly Unit values also results in an
allocation to the participant's account of a proportionate share of the
monthly earnings (or losses) of each fund based upon the extent of the
employee's participation (number of Units held) relative to the number of
Units held by all participants in the respective fund.
23
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts (Continued)
-------------------------------
The number and value of Units at December 31, 1993 and 1992 were as
follows:
December 31, 1993
-----------------
Number of Units
(in thousands) Value per Unit
---------------- --------------
Company Stock Fund* 92,363 $ 6.3708
Equity Fund** 28,253 $10.3684
Interest Income Fund *** 58,827 $ 4.1725
Bond Fund 29,644 $ 1.1377
Money Market Fund 50,458 $ 1.0648
Balanced Fund 159,521 $ 1.1744
December 31, 1992
-----------------
Number of Units
(in thousands) Value per Unit
-------------- --------------
Company Stock Fund* 89,570 $4.9975
Equity Fund** 28,123 $9.4223
Interest Income Fund*** 66,938 $3.8884
Bond Fund 30,927 $1.0360
Money Market Fund 47,833 $1.0205
Balanced Fund 142,081 $1.0404
* Formerly known as the Pacific Telesis Group Shares Fund
** Formerly known as the Diversified Equity Portfolio Fund
*** Formerly known as the Guaranteed Interest Fund
24
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Participation by Investment Direction
-------------------------------------
The number of active employees contributing to the Plan as of December 31,
1993 and 1992 by each investment direction were as follows:
December 31,
-----------------
1993 1992
-------- --------
Entirely in the Company Stock Fund 2,689 2,461
Entirely in the Equity Fund 1,083 1,086
Entirely in the Bond Fund 40 44
Entirely in the Money Market Fund 580 685
Entirely in the Balanced Fund 705 700
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 1,043 965
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 761 822
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 51 44
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 471 391
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 272 333
10% increments totalling 100% in the Equity Fund
and the Bond Fund 134 137
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,414 1,363
10% increments totalling 100% in the Money Market
and the Bond Fund 41 45
10% increments totalling 100% in the Money Market
and the Balanced Fund 100 121
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 107 108
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Money Market Fund 363 418
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 73 58
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,054 902
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 20 19
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 95 83
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 79 72
25
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Participation by Investment Direction (Continued)
------------------------------------------------
December 31,
-----------------
1993 1992
-------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 47 52
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 145 170
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 441 450
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 61 69
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 25 18
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 137 117
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 275 213
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 19 22
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 189 222
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 279 227
-------- --------
Total Employees Contributing 12,793 12,417
======== ========
26
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Tax Status
----------
The Internal Revenue Service issued a determination letter on May 4, 1993,
stating that the Plan, as amended effective January 1, 1993, meets the
requirements of a qualified plan under Sections 401(a) and 401(k) of the
Internal Revenue Code (the "Code") and is exempt from federal income taxes
under Section 501(a) of the Code.
27
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1993, 1992 and 1991, the net appreciation (depreciation) of investments, including
both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
Diversified Diversified
Telephone Government Equity
Company Portfolio Obligations Portfolio Equity
Stock Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1993
----
Common Stock $100,499 $ - $ - $ - $ -
Bank Common and Commingled Trust Funds - - - - 27,312
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation $100,499 $ - $ - $ - $ 27,312
=========== =========== =========== =========== ==========
1992
----
Common Stock $ (8,699) $ (2,899) $ - $ - $ -
Bank Common and Commingled Trust Funds - - (128) (1,703) 17,651
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation (Depreciation) $ (8,699) $ (2,899) $ (128) $ (1,703) $ 17,651
=========== =========== =========== =========== ==========
1991
----
Common Stock $(9,140) $ 5,273 $ - $ - $ -
Bank Common and Commingled Trust Funds - - 2,426 34,531 -
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation (Depreciation) $(9,140) $ 5,273 $ 2,426 $ 34,531 $ -
=========== =========== =========== =========== ==========
</TABLE>
28
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1993, 1992 and 1991, the net appreciation (depreciation) of investments, including
both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
Interest Money
Income Bond Market Balanced Grand
Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1993
----
Common Stock $ - $ - $ - $ - $100,499
Bank Common and Commingled Trust Funds - 3,116 - 19,926 50,354
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation $ - $ 3,116 $ - $ 19,926 $150,853
=========== =========== =========== =========== ==========
1992
----
Common Stock $ - $ - $ - $ - $(11,598)
Bank Common and Commingled Trust Funds - 1,034 - 5,476 22,330
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation $ - $ 1,034 $ - $ 5,476 $ 10,732
=========== =========== =========== =========== ==========
1991
----
Common Stock $ - $ - $ - $ - $ (3,867)
Bank Common and Commingled Trust Funds - - - - 36,957
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation $ - $ - $ - $ - $ 33,090
=========== =========== =========== =========== ==========
</TABLE>
29
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Plan Termination
----------------
The Corporation, by action of the Board of Directors, may at any time
terminate the making of deductions from salaries and pay of all
participating employees and of contributions by the Employing Company in
connection with the Plan. If at any time the profits of the Corporation
and of the Subsidiaries of the Corporation which are joined (or could be
joined) with it in a consolidated federal income tax return shall be less
than twice the combined contributions of all such companies under the Plan
and the Savings Plans since the preceding January 1, the making of
deductions from salaries and pay of all participating employees in the
Plan and of contributions by the Employing Company shall be terminated.
No termination shall have the effect of diverting the amounts held by the
Trustee for purposes other than as provided in the Plan.
Generally, following such a termination of the making of deductions and of
contributions by any Employing Company, such Employing Company may, at any
time after such termination, determine that the Plan and related trust
shall be liquidated as to such Employing Company, in which event
distribution shall be made to each of its participating employees (or the
person or persons entitled thereto) of all Units.
8. LESOP Provisions of the Plan
----------------------------
The Corporation's matching allocations are made through a trust for the
LESOP. Banker's Trust Company, as Trustee of the Pacific Telesis Group
Employee Stock Ownership Plan Master Trust, purchased 13,900,000 of the
Corporation's treasury shares at a total price of $691,052,400, or $49.25
per share plus accrued dividends, using a promissory note from the Trust
to the Corporation.
Corporate contributions and dividends will repay the principal and
interest on the LESOP loan. This will release shares of stock to be
allocated to participants' accounts equal in value to the Corporation's
matching obligation under the Plan. Shares will be valued at current
market value.
The 15-year promissory note is payable to the Corporation and matures
January 2, 2005. The terms of the note require that annual principal and
interest payments begin January 2, 1991. Interest payments are based upon
a variable rate and are adjusted quarterly.
30
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
9. Related Party Transactions
--------------------------
Trustee fees, other than fees attributable to the LESOP Savings Match
Accounts, are first charged to forfeitures arising from the after-tax
Savings Plan's matching accounts (but not the LESOP's Savings Stock Match
Accounts) and the remainder is charged to the applicable Plan fund or is
prorated among all Plan funds, except the LESOP fund, whichever is
appropriate. Investment manager fees, fees charged by financial
institutions in connection with the investment of any funds under the
Plan, and certain administrative fees applicable to the Plan are charged
to the applicable Plan fund(s). Brokerage fees, transfer taxes and other
expenses incident to the purchase or sale of securities are considered
part of the cost of the securities or a reduction in the sales price.
Trustee fees and certain administrative fees with respect to the LESOP
fund are paid by the Employing Company.
31
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
COMPANY STOCK FUND
(Dollars and shares in thousands) December 31, 1993
----------------------------------------
Percent Number of
of Fund Shares or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- --------- ---------- -------- ----------
Pacific Telesis Group common
shares* 97.7%
10,677 shs $333,034 $579,230
Short-term investments 0.5% $2,772 2,772 2,772
--------- --------- ----------
Total Company Stock Fund 98.2% $335,806 $582,002
========= --------- ----------
EQUITY FUND
(Dollars and units in thousands) December 31, 1993
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- --------- ---------- --------- ---------
State Street S&P 500 Fund* 99.9% 4,237 unt $252,578 $294,902
Short-term investments 0.4% $1,047 1,047 1,047
-------- --------- ---------
Total Equity Fund 100.3% $253,625 $295,949
======== --------- ---------
(See footnotes on page 35)
32
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
BOND FUND
(Dollars and units in thousands) December 31, 1993
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- ---------- -------- ----------
State Street Bond Fund 99.6% 2,956 unt $30,144 $33,884
Short-term investments 0.3% $101 101 101
-------- -------- ----------
Total Bond Fund 99.9% $30,245 $33,985
======== -------- ----------
MONEY MARKET FUND
(Dollars and units in thousands) December 31, 1993
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- ---------- -------- ----------
State Street Money Market Fund 99.2% 53,641 unt $53,641 $53,641
Short-term investments 0.3% $150 150 150
-------- -------- ----------
Total Money Market Fund 99.5% $53,791 $53,791
======== -------- ----------
BALANCED FUND
(Dollars and units in thousands) December 31, 1993
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- ---------- -------- ----------
State Street Balanced Fund* 98.7% 15,740 unt $160,748 $185,816
Short-term investments 0.2% $310 310 310
-------- -------- ----------
Total Balanced Fund 98.9% $161,058 $186,126
======== -------- ----------
(See footnotes on page 35)
33
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
INTEREST INCOME FUND
December 31, 1993
(Dollars and shares in thousands) ---------------------------------------
Percent
of Fund
Net Principal Fair
Name of Issuer and Maturity Dates Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Contracts with insurance
companies and banks:**
John Hancock (12/31/96) 10.0% $24,852 $24,852 $24,852
Metropolitan Life Insurance
Company (06/30/95-06/30/96) 15.3% 37,925 37,925 37,925
The Mutual Benefit Life
Insurance Company *** 0.5% 1,179 1,179 1,179
Connecticut General Life
Insurance Company
(12/31/94-12/29/95) 14.9% 36,882 36,882 36,882
Life Insurance of Georgia 3.7% 9,212 9,212 9,212
(12/31/97)
Provident National Assurance 5.9% 14,633 14,633 14,633
Company (12/31/97)
AETNA (12/31/98) 6.5% 16,010 16,010 16,010
Lotsoff Capital Management 6.5% 16,063 16,063 16,063
(06/30/98)
MONY (12/31/94) 3.1% 7,619 7,619 7,619
Allstate Insurance Company 13.5% 33,372 33,372 33,372
(06/30/96)
CNA (06/30/94) 1.9% 4,789 4,789 4,789
Prudential Asset Management
Group (06/30/96) 5.5% 13,624 13,624 13,624
American International Life
(06/30/97) 3.4% 8,534 8,534 8,534
-------- --------- ----------
Total contracts with insurance
companies and banks 90.7% 224,694 224,694 224,694
-------- --------- ----------
Short-term investments 3.3% 8,159 8,159 8,159
-------- --------- ----------
Total Interest Income Fund 94.0% 232,853 232,853 232,853
======== --------- ----------
GRAND TOTAL 98.1% $1,067,378 $1,384,706
======== ========= ==========
34
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
- -------------------
Percentages represent the item's fair value as a percent of the applicable
fund's Net Assets Available for Plan Benefits at December 31, 1993.
* Investment represents 5% or more of the total Net Assets Available for
Plan Benefits at December 31, 1993.
** The contracts with these insurance companies, banks and financial
institutions guarantee the repayment of principal and the crediting of
interest at a composite guaranteed interest rate in the range of 7.2% to
7.7% for 1993. The volume and timing of participating employee
contributions and withdrawals may cause the actual yield to vary from
this range. The composite guaranteed interest rate for 1994 is expected
to fall within a range of approximately 6.5% to 7.0%. The rates in
future years under new contracts may be higher or lower than these rates.
The maturity value of each contract is based on the balance of the amount
of contributed principal plus reinvested interest less distributions at
the date of maturity.
*** Mutual Benefit Life Insurance Company (MBL) is under the supervision of
the state of New Jersey and is currently in receivership. The maturity
of the contract with MBL is contingent on close-out proceedings initiated
by MBL upon its emergence from receivership status. The contract with
MBL represents less than 0.1% of total plan net assets.
35
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Current Value
of Asset on Net
Description Number of Purchase Selling Cost of Transaction Gain/
Identity of Party Involved of Assets Transactions Price Price Asset Date (Loss)
- -------------------------- ---------------------- ------------ -------- -------- -------- ------------ -------
<S> <S> <C> <C> <C> <C> <C> <C>
Bankers Trust Pyramid Short-term
Discretionary Cash Fund Investments 255 N/A 158,405 158,405 N/A -
Pacific Telesis Group Pacific Telesis Group
common shares common shares 16 N/A 14,291 9,253 N/A 5,038
Bankers Trust Pyramid Short-term
Discretionary Cash Fund Investments 314 147,601 N/A N/A 147,601 N/A
Pacific Telesis Group Pacific Telesis Group
common shares common shares 39 56,508 N/A N/A 56,508 N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the same
person, 5% of the Plan net assets available for plan benefits at the beginning of the Plan year, January 1, 1993.
</TABLE>
36
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Savings Plans Committee
Pacific Telesis Group Supplemental Retirement
and Savings Plan for Salaried and Nonsalaried Employees-Leveraged ESOP:
We have audited the accompanying statements of net assets available for plan
benefits of the Pacific Telesis Group Supplemental Retirement and Savings Plan
for Salaried and Nonsalaried Employees-Leveraged ESOP as of December 31, 1993
and 1992, and the related statement of changes in net assets available for
plan benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried
and Nonsalaried Employees-Leveraged ESOP as of December 31, 1993 and 1992, and
the changes in net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedule of
reportable transactions as of December 31, 1993, is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
As discussed in Note 2 to the financial statements, the Plan changed its
method of accounting for benefits payable.
/s/ Coopers & Lybrand
San Francisco, California
May 17, 1994
37
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993 and 1992
(Dollars in thousands)
ASSETS
1993 1992
---------- ----------
Investment - at fair value
Pacific Telesis Group Common Shares,
Cost $667,645 and $679,762 for 1993
and 1992, respectively (Note 3) $ 727,853 $ 606,370
Employer Receivable 67,561 67,209
Dividend Receivable 7,312 7,447
Short-Term Investments 4 51
---------- ----------
Total Assets 802,730 681,077
---------- ----------
LIABILITIES
Benefits Payable (Note 2) - -
Interest Payable 6,052 10,896
Note Payable (Note 7) 444,105 529,276
---------- ----------
Total Liabilities 450,157 540,172
---------- ----------
Net Assets Available For
Plan Benefits $ 352,573 $ 140,905
========== ==========
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Net Assets Allocated to Participants $ 302,562 $ 190,915
Net Assets Available (Deficit) for
Future Allocations 50,011 (50,010)
---------- ----------
Net Assets Available
For Plan Benefits $ 352,573 $ 140,905
========== ==========
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For The Year Ended December 31, 1993 and 1992
(Dollars in thousands)
1993 1992
--------- ---------
Net Assets Available for Plan Benefits,
January 1, as previously reported $139,079 $ 67,363
Add: Adjustment for the cumulative effect
on prior years of applying retroactively
the new method of accounting for
benefits payable (Note 2) 1,826 363
--------- ---------
Net Assets Available for Plan Benefits,
January 1, as adjusted 140,905 67,726
--------- ---------
Additions to Net Assets Attributed to:
Investment Income
Dividends on Pacific Telesis Group
Common Shares 29,402 29,877
Interest Income 3 5
Net Appreciation (Depreciation) of
Investments (Note 4) 133,544 (3,959)
Employer Contributions for Loan Repayment 76,567 83,738
--------- ---------
Total Additions 239,516 109,661
--------- ---------
Deductions from Net Assets Attributed to:
Distributions to Participants 12,113 8,143
Interest Expense 15,735 28,114
Administrative Expenses - 225
--------- ---------
Total Deductions 27,848 36,482
--------- ---------
Net Increase 211,668 73,179
--------- ---------
Net Assets Available for Plan Benefits,
December 31 $352,573 $140,905
========= =========
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
The following description of the Pacific Telesis Group Supplemental
Retirement and Savings Plan for Salaried and Nonsalaried Employees
Leveraged ESOP (the "Plan") provides only general information. For a more
complete description of the Plan's provisions, including the income tax
consequences of receiving distributions from the Plan, participants
should refer to the plan documents or the prospectus and summary plan
description dated January 1991, as amended.
A. General
The Pacific Telesis Group (the "Corporation") originally adopted two
separate leveraged employee stock ownership plans (the "LESOPs"),
effective December 1, 1989, in conjunction with the two existing Savings
Plans. The separate LESOPs were contained in restatements of the Savings
Plans adopted on December 21, 1989. On May 31, 1990, the Corporation
merged the LESOP portion of the Nonsalaried Savings Plan ("Nonsalaried
ESOP") with the LESOP portion of the Salaried Savings Plan ("Salaried
ESOP") to create the Plan. The Plan continues to operate under the plan
number of the Salaried LESOP.
On December 28, 1989, the LESOPs borrowed $691,052,400 from the
Corporation pursuant to a loan agreement and promissory note. Banker's
Trust Company, as Trustee of the Pacific Telesis Group Employee Stock
Ownership Plan Master Trust, using the proceeds of the loan, purchased
13,900,000 of the Corporation's treasury shares ("Shares") at a total
price of $691,052,400, or $49.25 per share plus accrued dividends. The
Shares were credited to a suspense account as required by Treasury
Regulations Section 54.4975-11(c). The terms of the loan were not
changed by the merger of the LESOPs to form the Plan.
Effective March 31, 1994, PacTel Corporation separated from Pacific
Telesis Group with PacTel Corporation renamed AirTouch Communications.
Consequently, the Plan was amended so that for each share of Pacific
Telesis Group common stock held by the Plan as of March 21, 1994, the
Plan will receive an equivalent number of shares of common stock of
AirTouch Communications. Participants will have the option of either
receiving a distribution of the portion of their account attributable to
the AirTouch stock in shares of AirTouch stock, cash, or a direct
rollover; transferring the AirTouch stock in their account to the
AirTouch Stock Fund in the Savings Plan; or converting the AirTouch stock
to Pacific Telesis Group stock.
40
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
B. Employee Contributions and Employing Company Matching Allocations
Under the Savings Plans, a participant can make basic contributions of
from one to six percent of the participant's earnings for a month, which
prior to March 1, 1990 were matched by monthly contributions from the
Corporation and its participating subsidiaries (the "Employing Company")
to the Savings Plans equal to 66-2/3% of the basic contributions.
Effective March 1, 1990, Employing Company contributions are made to the
Plan and used to repay the loan described above in sufficient amounts to
release Shares from the suspense account so that the value of matching
allocations will be 66-2/3% of the participants' basic contributions to
the Savings Plans for each month. Thus, the Plan replaces the matching
feature of the Savings Plans.
If the Shares released from the suspense account by loan payments made
within a Plan year are more valuable than 66-2/3% of the participant's
basic contributions, the excess value will be allocated as of the last
day of the Plan year among those participants who made contributions
during the last month of the Plan year in proportion to their earnings
for such month.
C. Participant Accounts
Units representing shares of stock ("Units") released from the suspense
account on behalf of a participant are credited to a "Savings Match
Stock" account maintained for a participant under the Plan. Shares are
released from the suspense account on a monthly basis prior to the actual
payment of principal and interest on the Plan loan. The market value of
shares released from the suspense account for the 1993 plan year was
$82,500,037. The final loan payment for any Plan year will be determined
as of the end of such year pursuant to the formula set forth in Treasury
Regulations Section 54.4975-7(b)(8), based on the number of shares of
stock released during each month of such year.
Dividends on Shares purchased with the Plan loan may be used to repay the
loan, which will cause the release of shares from the suspense account.
Whenever dividends on shares credited to participant's Savings Match
Stock account are used for this purpose, the Plan provides that shares
with a fair market value at least equal to the amount of the dividend
will be allocated to the participant's Savings Match Stock account.
These loan payments and released shares are also taken into account when
the final calculation of principal and interest to be paid for the year
is performed.
41
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
D. Vesting and Forfeitures
Savings Match Stock accounts are fully vested and nonforfeitable after a
participant either completes three years of service or reaches age 65
while employed. However, the portion of a salaried participant's Savings
Match Stock account attributable to before-tax employee deductions is
always fully vested and nonforfeitable, regardless of age or service.
Savings Match Stock accounts are also fully vested upon termination of
employment due to retirement, disability, termination under certain
severance pay plans or termination due to layoff. Forfeitures from
Savings Match Stock accounts are allocated among participating employees.
E. Withdrawals and Distributions
The valuation, vesting, withdrawal and distribution rules governing
Savings Match Stock accounts generally are the same as the rules
governing the company accounts under the Savings Plans.
F. Tax Consequences of Participation
Employees will not have taxable income as a result of Employing Company
contributions or earnings on Plan assets before the amounts are
distributed from the Plan. When a distribution is received from the
Plan, it may be partially or fully subject to federal and state income
taxes depending on whether the participant elects to receive cash or
shares of appreciated stock.
In addition to any regular income tax that may be due, a 10% additional
federal tax (and a similar 2-1/2% additional California tax) generally
applies to the taxable amount of distributions received prior to age 59-
1/2. However, the taxable portion of certain eligible distributions may
be rolled over to an Individual Retirement Arrangement or other qualified
plan within 60 days following distribution or, effective January 1, 1993,
directly from the Plan in a trustee to trustee transfer, in which case
any current regular income tax and additional tax will be avoided. Five-
or ten-year averaging may be available in some circumstances to determine
the regular income tax on the taxable portion of a lump sum distribution
but only if no part of the distribution is rolled over.
The preceding general discussion does not cover all tax aspects of
participation in the Plan. Participants should refer to the current
prospectus for additional information on the tax consequences of
withdrawals and distributions from the Plan. As the tax laws are complex
and frequently change, participants or beneficiaries should consult a
qualified tax advisor to obtain current information as well as advice
that is tailored to their particular circumstances.
42
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies
------------------------------
The Plan's investment in the Pacific Telesis Group common shares is valued
at the last published sales price at the end of each Plan year as reported
on the composite tape of the New York Stock Exchange.
In accordance with the policy of stating investments at fair value, the
net unrealized appreciation (depreciation), in addition to realized gains
and losses, is included in the net appreciation (depreciation) of
investments presented in the accompanying financial statements.
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
Purchases and sales of securities are reflected as of the trade date.
Amounts allocated to accounts of participants who have elected to withdraw
from the Plan but who were not paid as of the year-end are included in net
assets available for benefits. In 1992 and prior years, these amounts
were reflected as benefits payable in the statement of net assets
available for plan benefits and as distributions to participants in the
statement of changes in net assets available for plan benefits. In 1993,
the American Institute of Certified Public Accountants (AICPA) established
a new guideline for the treatment of these amounts. The new guideline
states that the Plan should not reflect these amounts as a liability on
the statement of net assets. The 1992 statement of net assets available
for plan benefits and statement of changes in net assets available for
plan benefits have therefore been restated to retroactively reflect this
accounting change. The effect of the restatement was to reduce the 1992
benefits payable and increase net assets available for plan benefits by
$1,826,000.
43
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL AND RETIREMENT SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
The Department of Labor requires these amounts to be reported as a
liability on the Form 5500. The following reconciles net assets available
for benefits between these financial statements and the Form 5500 as of
December 31 (dollars in thousands):
1993 1992
------------ ------------
Net assets available for plan
benefits per financial statements $352,573 $140,905
Benefits due for participant
withdrawal/distribution (2,661) (1,826)
------------ ------------
Net assets available for Plan
benefits per Form 5500 $349,912 $139,079
============ ============
Similarly, the 1993 distributions to participants amount reflected in the
statement of changes of net assets available for benefits is reconciled to
the Form 5500 as follows (dollars in thousands):
1993
------------
Distributions to participants per
financial statements $12,113
Benefits due:
Beginning of year (1,826)
End of year 2,661
------------
Distributions to participants per Form 5500 $12,948
============
44
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Investment
----------
The Plan invests its assets in Pacific Telesis Group common shares. As of
December 31, 1993 and 1992, total investment, including shares in the
Savings Stock Match account and shares held in the suspense account, is as
follows (Dollars in thousands):
Fair
1993 Units Cost Value
---- ---------- -------- --------
Savings Stock Match Account 5,521,697 $275,140 $299,552
Suspense Account 7,894,951 392,505 428,301
---------- -------- --------
Total 13,416,648 $667,645 $727,853
========== ======== ========
Fair
1992 Units Cost Value
---- ---------- -------- --------
Savings Stock Match Account 4,248,980 $211,652 $188,549
Suspense Account 9,415,689 468,110 417,821
---------- -------- --------
Total 13,664,669 $679,762 $606,370
========== ======== ========
4. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1993 and 1992 the net appreciation
(depreciation) of investments, including both net realized and unrealized
amounts, was as follows (Dollars in thousands):
1993 1992
---------- ----------
Common Stock $133,544 $(3,959)
========== ==========
45
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Tax Status
----------
The Internal Revenue Service issued an initial determination letter on May
4, 1993 stating that the Plan, as adopted on December 21, 1989 and as
amended effective January 1, 1993, meets the requirements of a qualified
plan under section 401(a) of the Internal Revenue Code and as an employee
stock ownership plan under section 4975(e)(7) of the Internal Revenue
Code.
6. Plan Termination
----------------
The Corporation, by action of the Board of Directors, may at any time
terminate the making of contributions by all Employing Companies in
connection with the Plan. If at any time the profits of the Corporation
and of the Subsidiaries of the Corporation which are joined (or could be
joined) with it in a consolidated federal income tax return shall be less
than twice the combined contributions of all such companies under the Plan
and the Savings Plans since the preceding January 1, the making of
contributions by all Employing Companies shall be terminated. No
termination shall have the effect of diverting the amounts held by the
Trustee to purposes other than as provided in the Plan.
Following such a termination of contributions by all Employing Companies,
shares held in the suspense account shall be redeemed by the Corporation
or sold to satisfy any outstanding indebtedness of the Plan. Any balance
remaining in the suspense account shall be allocated among participating
employees. Upon the termination of contributions, the Plan may remain in
existence, but the Savings Match Stock accounts shall become
nonforfeitable. However, any Employing Company may, at any time after
such termination, determine that the Plan and related trust shall be
liquidated as to such Employing Company, in which event distribution shall
be made to each of its participating employees (or the person or persons
entitled thereto) of all Units.
7. Note Payable
------------
The 15-year promissory note is payable to the Corporation and matures
January 2, 2005. Annual principal and interest payments began January 2,
1991. The interest rate on the note is based on the London Interbank
Offered Rate (LIBOR) and is adjusted quarterly. The Plan paid $20,596,000
and $26,584,000 in interest and $85,156,000 and $77,390,000 in principal
on the outstanding loan balance during the year ended December 31, 1993
and 1992, respectively.
46
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Note Payable (Continued)
------------------------
Repayment of principal in subsequent years will follow the terms of the
note or may be accelerated according to management's discretion.
8. Related Party Transactions
--------------------------
Administrative expenses of the Plan are paid by the Employing Company,
except that trustee fees and certain administrative expenses in
connection with the Plan may be charged to the income earned in the
suspense account. Brokerage fees, transfer taxes and other expenses
incident to the purchase or sale of securities are considered part of the
cost of the securities or a reduction in the sales price. Transfer taxes
applicable to distributions of shares are paid by the Employing Company.
47
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Current Value
of Asset on Net
Description Number of Purchase Selling Cost of Transaction Gain/
Identity of Party Involved of Assets Transactions Price Price Asset Date (Loss)
- -------------------------- ---------------------- ------------ -------- -------- -------- ------------ -------
<S> <S> <C> <C> <C> <C> <C> <C>
Bankers Trust Pyramid
Directed Account Short-term
Cash Fund Investments 33 N/A 11,413 11,413 N/A -
Pacific Telesis Group Pacific Telesis Group
common shares common shares 32 N/A 10,983 11,228 N/A (245)
Bankers Trust Pyramid
Directed Account Short-term
Cash Fund Investments 51 11,366 N/A N/A 11,366 N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the same
person, 5% of the Plan net assets available for plan benefits at the beginning of the Plan year, January 1, 1993.
</TABLE>
48
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Plans Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
PACIFIC TELESIS GROUP
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
By Savings Plans Committee
By /s/ R. P. McGahan
-------------------------------
R. P. McGahan
Member of the Committee
Dated: June 16, 1994
<PAGE>
Exhibit 99b
Form 10-K for 1993
File No. 1-8609
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-8609
----------
PACIFIC TELESIS GROUP
SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
----------
PACIFIC TELESIS GROUP
130 Kearny Street, San Francisco, California 94108
<PAGE>
TABLE OF CONTENTS
Description
-----------
Item Page
----- ----
1. Financial Statements and Exhibits . . . . . . . . . . . . . . . 3
2
<PAGE>
Item 1. Financial Statements and Exhibits
(a) Financial Statements of the Plan included herein:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Plan Benefits -
December 31, 1993 and 1992
Statements of Changes in Net Assets Available for Plan
Benefits For the Years Ended December 31, 1993, 1992 and
1991
Notes to Financial Statements
Schedules:
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
Other schedules are omitted because the information
required is contained in the Financial Statements.
(b) Exhibits:
None
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Savings Plans Committee
Pacific Telesis Group Supplemental Retirement
and Savings Plan for Nonsalaried Employees:
We have audited the accompanying statements of net assets available for plan
benefits of the Pacific Telesis Group Supplemental Retirement and Savings Plan
for Nonsalaried Employees as of December 31, 1993 and 1992, and the related
statements of changes in net assets available for plan benefits for each of
the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Pacific Telesis Group Supplemental Retirement and Savings Plan for Nonsalaried
Employees at December 31, 1993 and 1992, and the changes in net assets
available for plan benefits for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions as of December 31,
1993 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to
present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
As discussed in Note 2 to the financial statements, the Plan changed its
method of accounting for distributions payable.
/s/ Coopers & Lybrand
San Francisco, California
May 17, 1994
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993
(Dollars in thousands)
<CAPTION>
Diversified
Company Telephone Interest CWA/
Stock Portfolio Income IBEW Equity
ASSETS: Fund Fund Fund Funds Fund
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments at fair value (cost $660,152)
Pacific Telesis Group common shares $628,746 $ - $ - $ - $ -
State Street S&P 500 Fund - - - - 45,716
State Street Long Bond Fund - - - - -
State Street Money Market Fund - - - - -
State Street Balanced Fund - - - - -
Contracts with insurance companies and banks - - 146,858 - -
Short-term investments 6,426 - 7,806 - 768
----------- ----------- ---------- ---------- ----------
Total Investments 635,172 - 154,664 - 46,484
Employee contributions receivable 344 - - - 16
Fund and other transfers receivable - net 2,562 - - - -
Dividends and interest receivable 6,322 - 1,770 - -
Receivable for investments sold - - 7,703 - -
----------- ----------- ---------- ---------- ----------
Total Assets 644,400 - 164,137 - 46,500
----------- ----------- ---------- ---------- ----------
LIABILITIES:
Fund and other transfers payable - net - - 1,233 - 951
Payable for investments purchased - - 904 - -
Fees payable 226 - 71 - 18
----------- ----------- ---------- ---------- ----------
Total Liabilities 226 - 2,208 - 969
----------- ----------- ---------- ---------- ----------
Net assets available for Plan benefits $644,174 $ - $161,929 $ - $ 45,531
=========== =========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced Grand
ASSETS: Fund Fund Fund Total
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value (cost $660,152)
Pacific Telesis Group common shares $ - $ - $ - $628,746
State Street S&P 500 Fund - - - 45,716
State Street Long Bond Fund 14,623 - - 14,623
State Street Money Market Fund - 17,854 - 17,854
State Street Balanced Fund - - 55,486 55,486
Contracts with insurance companies and banks - - - 146,858
Short-term investments 337 1,301 887 17,525
----------- ---------- ---------- ----------
Total Investments 14,960 19,155 56,373 926,808
Employee contributions receivable (Forfeiture credits) (7) 44 36 433
Fund and other transfers receivable - net - 105 - 2,667
Dividends and interest receivable - 71 - 8,163
Receivable for investments sold - - - 7,703
----------- ---------- ---------- ----------
Total Assets 14,953 19,375 56,409 945,774
----------- ---------- ---------- ----------
LIABILITIES:
Fund and other transfers payable - net 222 - 229 2,635
Payable for investments purchased - 71 - 975
Fees payable 6 6 21 348
----------- ---------- ---------- ----------
Total Liabilities 228 77 250 3,958
----------- ---------- ---------- ----------
Net assets available for Plan benefits $14,725 $19,298 $56,159 $941,816
=========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
6
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1992
(Dollars in thousands)
<CAPTION>
Pacific Diversified
Telesis Telephone Guaranteed CWA/
Group Portfolio Interest IBEW
ASSETS: Shares Fund Fund Fund Funds Total
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments at fair value (cost $575,351)
Pacific Telesis Group common shares $439,487 $ 4,443 $ - $ - $443,930
Common shares, excluding Pacific Telesis Group common shares - 41,282 - - 41,282
Contracts with insurance companies and banks - - 177,392 664 178,056
Short-term investments 41,639 18,506 36,417 460 97,022
----------- ----------- ---------- ---------- ----------
Total Investments 481,126 64,231 213,809 1,124 760,290
Employee contributions receivable 64 - 108 2 174
Fund and other transfers receivable - net 274 - 6 - 280
Dividends and interest receivable 5,466 272 1,292 4 7,034
Receivable for investments sold - - 1 - 1
----------- ----------- ---------- ---------- ----------
Total Assets 486,930 64,503 215,216 1,130 767,779
----------- ----------- ---------- ---------- ----------
LIABILITIES:
Distributions payable (Note 2) - - - - -
Fund and other transfers payable - net - 283 - 1 284
Payable for investments purchased - - 1 - 1
Fees payable 9 5 5 4 23
----------- ----------- ---------- ---------- ----------
Total Liabilities 9 288 6 5 308
----------- ----------- ---------- ---------- ----------
Net assets available for Plan benefits $486,921 $64,215 $215,210 $1,125 $767,471
=========== =========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
7
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Diversified
Company Telephone Interest CWA/
Stock Portfolio Income IBEW Equity
Fund Fund Fund Funds Fund
----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits,
January 1, 1993, as previously reported $480,003 $63,153 $212,155 $ 1,110 $ -
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the new method
of accounting for distributions payable (Note 2) 6,918 1,062 3,055 15 -
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
January 1, 1993, as adjusted 486,921 64,215 215,210 1,125 -
----------- ----------- ---------- --------- ---------
Employee contributions 39,253 - 5 - 8,767
Investment income:
Dividends on Pacific Telesis Group common shares 24,466 239 - - -
Interest 105 41 12,103 6 4
Net appreciation (depreciation) of investments (Note 6) 111,416 (2,072) - 2 4,175
Transfers of participants' balances, net 24,344 (61,486) (48,963) (1,125) 34,668
----------- ----------- ---------- --------- ---------
Total Additions 199,584 (63,278) (36,855) (1,117) 47,614
Less: Distributions to participants (Note 2) 41,418 937 16,133 8 2,004
Fees 913 - 293 - 79
----------- ----------- ---------- --------- ---------
Net increase 157,253 (64,215) (53,281) (1,125) 45,531
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
December 31, 1993 $644,174 $ - $161,929 $ - $45,531
=========== =========== ========== ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
8
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced Grand
Fund Fund Fund Total
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net assets available for Plan benefits,
January 1, 1993, as previously reported $ - $ - $ - $756,421
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the new method
accounting for distributions payable (Note 2) - - - 11,050
----------- ---------- --------- ---------
Net assets available for Plan benefits,
January 1, 1993, as adjusted - - - 767,471
----------- ---------- --------- ---------
Employee contributions 3,884 15,253 9,320 76,482
Investment income:
Dividends on Pacific Telesis Group common shares - - - 24,705
Interest 1 433 4 12,697
Net appreciation (depreciation) of investments (Note 6) 1,154 - 5,929 120,604
Transfers of participants' balances, net 10,183 6,101 44,184 7,906
----------- ---------- --------- ---------
Total Additions 15,222 21,787 59,437 242,394
Less: Distributions to participants (Note 2) 468 2,448 3,189 66,605
Fees 29 41 89 1,444
----------- ---------- --------- ---------
Net increase 14,725 19,298 56,159 174,345
----------- ---------- --------- ---------
Net assets available for Plan benefits,
December 31, 1993 $14,725 $19,298 $56,159 $941,816
=========== ========== ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
9
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the year ended December 31, 1992
(Dollars in thousands)
<CAPTION>
Pacific Diversified
Telesis Telephone Guaranteed CWA/
Group Portfolio Interest IBEW
Shares Fund Fund Fund Funds Total
----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits,
January 1, 1992, as previously reported $458,944 $62,064 $184,957 $ 925 $706,890
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the new method
of accounting for distributions payable (Note 2) 6,519 540 3,495 8 10,562
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
January 1, 1992, as adjusted 465,463 62,604 188,452 933 717,452
----------- ----------- ---------- --------- ---------
Employee contributions 45,216 - 27,495 195 72,906
Investment income:
Dividends on Pacific Telesis Group common shares 22,457 287 - - 22,744
Other dividends - 2,479 - - 2,479
Interest 275 50 15,557 41 15,923
Net appreciation (depreciation) of investments (Note 6) (1,054) 6,121 - 22 5,089
Transfers of participants' balances, net (4,381) (3,721) 8,213 7 118
----------- ----------- ---------- --------- ---------
Total Additions 62,513 5,216 51,265 265 119,259
Less: Distributions to participants (Note 2) 41,009 3,588 24,450 51 69,098
Fees 46 17 57 22 142
----------- ----------- ---------- --------- ---------
Net increase 21,458 1,611 26,758 192 50,019
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
December 31, 1992, as adjusted $486,921 $64,215 $215,210 $1,125 $767,471
=========== =========== ========== ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
10
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the year ended December 31, 1991
(Dollars in thousands)
<CAPTION>
Pacific Diversified
Telesis Telephone Guaranteed CWA/
Group Portfolio Interest IBEW
Shares Fund Fund Fund Funds Total
----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits,
January 1, 1991, as previously reported $445,796 $64,898 $153,343 $812 $664,849
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the new method
of accounting for distributions payable (Note 2) 8,533 1,304 3,358 19 13,214
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
January 1, 1991, as adjusted 454,329 66,202 156,701 831 678,063
----------- ----------- ---------- --------- ---------
Employee contributions 46,622 - 25,494 194 72,310
Investment income:
Dividends on Pacific Telesis Group common shares 21,377 328 - - 21,705
Other dividends - 2,723 - - 2,723
Interest 340 54 14,113 49 14,556
Net appreciation (depreciation) of investments (Note 6) (4,972) 2,786 - 22 (2,164)
Transfers of participants' balances, net (8,539) (4,300) 13,190 (57) 294
----------- ----------- ---------- --------- ---------
Total Additions 54,828 1,591 52,797 208 109,424
Less: Distributions to participants (Note 2) 43,662 5,178 20,927 92 69,859
Fees 32 11 119 14 176
----------- ----------- ---------- --------- ---------
Net increase (decrease) 11,134 (3,598) 31,751 102 39,389
----------- ----------- ---------- --------- ---------
Net assets available for Plan benefits,
December 31, 1991, as adjusted $465,463 $62,604 $188,452 $933 $717,452
=========== =========== ========== ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
11
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
The following description of the Pacific Telesis Group Supplemental
Retirement and Savings Plan for Nonsalaried Employees (the "Plan")
provides only general information. For a more complete description of the
Plan's provisions, including the income tax consequences of receiving
distributions from the Plan, participants should refer to the plan
documents or the prospectus and summary plan description dated January
1991, as amended.
A. General
The Plan was established by Pacific Telesis Group (the "Corporation") to
provide a convenient way for eligible employees to save on a regular and
long-term basis and to supplement retirement income. The Plan and the
Pacific Telesis Group Supplemental Retirement and Savings Plan for
Salaried Employees incorporate a leveraged employee stock ownership plan
called the Pacific Telesis Group Supplemental Retirement and Savings Plan
for Salaried and Nonsalaried Employees-Leveraged ESOP (the "LESOP") to
provide for Company matching allocations. The LESOP allows the Plan to
borrow money to purchase Pacific Telesis Group Shares, which are held
initially in a suspense account under the Plan. As the Plan pays off the
loan with Employing Company contributions, shares are released from the
suspense account and allocated to employees' accounts.
B. Employee Contributions and Employing Company Matching Allocations
Employee Contributions - Nonsalaried employees of the Corporation and its
participating subsidiaries (the "Employing Company") are eligible to
participate in the Plan after completing one year of service. Basic
deductions of up to 6% of pay may be contributed in 1% increments. If the
employee has authorized the maximum basic deduction, a supplemental
deduction may also be authorized which, when added to the basic deduction,
results in a total deduction of not more than 16% of the employee's pay.
Basic and supplemental deductions may be made on an after-tax or before-
tax basis, as elected by the employee. The employee may change the rate
of employee deductions as of the first payroll period ending in any month
subject to a maximum of three elections per year. The election must be
made at least five days before the beginning of any month to be effective
for that month.
12
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Employee deductions on a before-tax basis are limited to an annual
maximum, adjusted for inflation ($9,240 for 1994, $8,994 for 1993 and
$8,728 for 1992). Pay eligible for deductions is limited to an annual
maximum, adjusted for inflation ($242,280 for 1994, $235,840 for 1993 and
$228,860 for 1992).
Employing Company Matching allocations - Each participant receives a
matching allocation equal to 66-2/3% of the employee's basic deductions.
A matching allocation is not made with respect to supplemental deductions.
The matching allocation is made to the Savings Match Stock account under
the LESOP.
Rollover Contributions - Nonsalaried employees with less than one year of
service may elect to roll over a distribution from another qualified plan
to the Plan prior to the time the employee becomes an eligible employee.
Participants who retire and elect a cashout from the Pacific Telesis Group
Pension Plan for Non-Salaried Employees may roll over the cashout to the
Plan. The amount rolled over will be credited to the employees's account
as of the last day of the month in which the rollover was received.
C. Investment Directions
Employees may direct that their payroll deductions be invested in any of
the following funds, in 10% increments, with elections totalling 100%:
(a) the Company Stock Fund;
(b) the Equity Fund;
(c) the Bond Fund;
(d) the Money Market Fund;
(e) the Balanced Fund.
Employing Company matching allocations under the LESOP are invested only
in Pacific Telesis Group shares.
13
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
The Corporation amended the Plan effective January 1, 1993, to offer four
new investment options, namely the Money Market Fund, the Bond Fund, the
Balanced Fund, and the Equity Fund, and to rename to Guaranteed Interest
Fund and the Pacific Telesis Group Shares Fund as the Interest Income Fund
and the Company Stock Fund, respectively. In addition, three investment
options - the Diversified Telephone Portfolio Fund, the CWA Fund, and the
IBEW Fund - were liquidated and their remaining account balances
transferred into either into the Company Stock Fund or Money Market Fund,
unless elections were made by employees to direct their funds into other
available investment options. The Interest Income Fund was closed to new
contributions and investment transfers as of December 31, 1992.
Once in any three-month period, participants can transfer all or a portion
of their investment in an investment fund to another permitted investment
fund or combination of investment funds. Transfers may be made by
telephoning PIN (Participant Inquiry Network) on or before the effective
date of transfer (last day of the month). Participants may make transfers
among certain funds in 5% increments. However, Pacific Telesis Group
shares held in the LESOP are not transferable to the Plan's investment
fund.
Effective March 31, 1994, the Corporation has amended the Plan to add a
new investment fund, the AirTouch Stock Fund. This new fund will be
established upon the separation of PacTel Corporation from Pacific Telesis
Group on April 1, 1994, and will consist of AirTouch common shares
attributable to the shares of Pacific Telesis Group held in the Company
Stock Fund and AirTouch common shares transferred from the LESOP. The
Plan will allow fund transfers out of the Air Touch Stock Fund to any
other investment fund option, except the Interest Income Fund, as of the
end of any month. The once-every-three-months transfer limit described
above will continue to apply to the other investment funds. The AirTouch
Stock Fund will be closed to new contributions and investment transfers
after March 31, 1994.
D. Vesting and Forfeitures
Employee deduction accounts are always fully vested and nonforfeitable.
Employing Company matching accounts (the Savings Plan's matching account
and the LESOP's Savings Match Stock account) are fully vested after a
participant either completes three years of service or reaches age 65
while employed. Employing Company matching accounts are also fully vested
upon termination of employment due to retirement, disability, death,
termination under certain severance pay plans or termination due to
layoff.
14
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
The nonvested Employing Company matching accounts are forfeited upon
termination of employment or withdrawal of basic deductions made in the
current and two preceding years. Generally, an employee may restore any
forfeiture caused by a withdrawal or distribution by making a lump sum
payment within five years equal to the portion of the distribution or
withdrawal attributable to employee deductions and related Employing
Company matching allocations amount previously received. Forfeitures are
automatically restored if the employee did not receive a distribution upon
termination of employment and is reemployed within five years.
Forfeitures from the LESOP's Savings Match Stock Accounts are applied
toward subsequent matching allocations, and forfeitures, if any, arising
from the Savings Plan's matching account are applied to pay trustee fees.
E. Withdrawals and Distributions
In-Service Withdrawals - Once in any six-month period, a participant while
still employed may elect to withdraw all or part of his or her account as
follows:
o The value of after-tax supplemental deductions (and post-1986
earnings), after-tax basic deductions (and post-1986 earnings) made
more than two calendar years before the year of withdrawal, vested
Employing Company matching allocations made more than two calendar
years before the year of withdrawal, and rollover contributions may be
withdrawn without penalty. After-tax basic deductions made in the
current and two preceding plan years may be withdrawn only in a total
withdrawal of available after-tax accounts and before-tax Employing
Company matching allocations. If a total withdrawal is made, the value
of the nonvested Employing Company matching allocations will be
forfeited and Employing Company matching allocations will be suspended
for six months following the withdrawal date. However, participants
may continue their own deductions during the suspension period. A
partial withdrawal must be a minimum of $300 and a multiple of $50.
Employees do not need to specify the actual dollar amount of a total
after-tax withdrawal.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
o The value of before-tax deductions and the value of vested Employing
Company matching allocations may be withdrawn, in total or in a partial
withdrawal of at least $300 and a multiple of $50, by employees who
have attained age 59-1/2. If before-tax basic deductions are
withdrawn, the value of any nonvested before-tax Employing Company
matching allocations are forfeited. However, before-tax deductions may
not be withdrawn by employees who have not yet attained age 59-1/2
except in the event of a hardship created by the purchase cost of a
primary residence, current year expenses of post-secondary education,
eviction or foreclosure on a principal residence, unreimbursed medical
expenses, and certain federal and state income taxes attributable to
post-1991 hardship withdrawals. The employee must demonstrate that no
other resources are available to meet the need, and the reason given
and amount requested must be approved by the Savings Plans Committee.
A hardship withdrawal must be at least $300 and a multiple of $50.
Post-1988 earnings on employee before-tax deductions are not available
for hardship withdrawal.
Distribution upon Termination of Employment - A participant who has
terminated employment is entitled to a distribution of his or her vested
accounts as follows:
o If the employee terminated employment for reasons other than retirement
on a service pension or disability, the employee may elect to receive a
distribution in a single sum payment at any time between termination
and attainment of age 65. However, if the employee's vested account
has a value of less than $3,500, the account is distributed
automatically following termination of employment.
o If the employee terminates employment on account of retirement on a
service pension or disability, the employee may elect to receive a
distribution in a single sum payment or in annual installments over a
period of years not to exceed the employee's life expectancy,
commencing at any time between termination of employment and April 1
following the attainment of age 70-1/2. Participants on leaves of
absence after expiration of short-term disability benefits are treated
as though their employment has terminated and they are eligible for a
distribution.
o Effective January 1, 1993, an employee who terminates for any reason
may elect to transfer all or part of his or her account, except for the
amount of the employee's after-tax contributions and distributions
required after age 70-1/2, from the Plan to another qualified plan in a
trustee to trustee transfer or within 60 days to an Individual
Retirement Arrangement or other qualified plan, in lieu of receiving a
lump sum distribution.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Distribution Upon Death - The designated beneficiary or beneficiaries of
participants who die before the effective date of the distribution will
receive the entire amount of their vested accounts, as soon as practicable
after the participant's death, in a single sum payment or in two annual
installments (if the participant so elected before 1985). Effective
October 1992, a beneficiary may elect a single sum payment in lieu of the
installment method.
Age 70-1/2 Distributions During Employment - Employees who remain employed
after attaining age 70-1/2 will automatically receive distributions in
annual installments beginning not later than April 1 of the following
year.
Form of Payment - Distributions as well as withdrawals are valued as of
the end of the month they are requested (some exceptions apply).
Withdrawals and distributions are made in cash, except a participant or
beneficiary may choose to receive cash or shares from amounts invested in
the Company Stock Fund or in the LESOP. Effective March 31, 1994, a
participant or beneficiary may also choose to receive cash or shares from
amounts invested in the AirTouch Stock Fund.
F. Tax Consequences of Participation
Employees may designate their basic and supplemental deductions as before-
tax or after-tax, or as a combination of both. The before-tax basic and
supplemental deductions are intended as contributions under a salary
deferral arrangement qualified under Section 401(k) of the Internal
Revenue Code. Under such an arrangement, the employee's before-tax
deductions are considered a reduction in taxable compensation and are
treated as employer contributions to the Plan (rather than employee
contributions). Before-tax deductions reduce the employee's W-2
compensation for federal income tax purposes and for the income tax
purposes of California and most other states. However, withdrawals of
before-tax contributions are subject to severe restrictions while the
employee is in-service (see "Withdrawals and Distributions").
Employees will not have taxable income as a result of Employing Company
contributions (including the employee's before-tax deductions that are
treated as employer contributions or allocations) or earnings on Plan
assets before the amounts are distributed from the Plan. When a
distribution is received from the Plan other than in a direct rollover
transfer, it may be partially or fully subject to federal and state income
taxes depending on the extent it represents a return of the employee's
after-tax contributions and on whether the participant elects to receive
shares of appreciated stock. In addition to any regular income tax that
may be due, a 10% additional federal tax (and a similar 2-1/2% additional
California tax) generally applies to the taxable amount of distributions
received prior to age 59-1/2.
17
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
However, the taxable portion of certain eligible distributions may be
rolled over to an Individual Retirement Arrangement or other qualified
plan within 60 days following distribution or effective January 1, 1993,
directly from the Plan in a trustee to trustee transfer, in which case any
current regular income tax and additional tax will be avoided. Five- or
ten-year averaging may be available in some circumstances to determine the
income tax on the taxable portion of a lump sum distribution but only if
no part of the distribution is rolled over.
The preceding general discussion does not cover all tax aspects of
participation in the Plan. Participants should refer to the current
prospectus and summary plan description for additional information on the
tax consequences of withdrawals and distributions from the Plan. As the
tax laws are complex and frequently change, participants or beneficiaries
should consult a qualified tax advisor to obtain current information as
well as advice that is tailored to their particular circumstances.
2. Summary of Accounting Policies
------------------------------
Investments are carried at their estimated fair values determined as
follows:
o Pacific Telesis Group common shares in the Company Stock Fund and the
LESOP are valued at the last published sales prices at the end of each
Plan year as reported on the composite tape of the New York Stock
Exchange.
o The Plan's investments in the Bond Fund, Money Market Fund, Balanced
Fund, and Equity Fund are stated at the fair values of the total units
of participation held by the Plan in each of these trust funds. The
fair values of the units of participation held by the Plan are
established by Bankers Trust Company, the Plan's trustee, and reflect
the market values of each fund's underlying assets, as reported by the
investment manager, State Street Asset Management, a subsidiary of
State Street Bank and Trust. The Bond Fund invests primarily in long-
term obligations, including U.S. Government and government agency
debts, and corporate bonds; the Money Market Fund invests primarily in
short-term debts of U.S. Government agencies and corporations; the
Balanced Fund invests in a predetermined mix of large U.S. and
international company stocks, high quality bonds, and money market
instruments; the Equity Fund invests primarily in a broad mix of U.S.
company common stocks.
18
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
o The Plan's investments in the Interest Income Fund are valued at the
amount of contributed principal plus reinvested interest less
distributions. The Interest Income Fund invests in contracts with
insurance companies, banks or other financial institutions, savings
accounts, certificates of deposit, obligations of the United States
government or other credit worthy organizations, commercial paper,
corporate bond or other debt obligations, as well as other fixed income
investments (subject to any guidelines adopted by the Corporation)
which guarantee by agreement the repayment of principal plus interest.
In accordance with the policy of stating investments at fair value, net
unrealized appreciation (depreciation), in addition to realized gains and
losses, is included in the net change in appreciation (depreciation) of
investments presented in the accompanying financial statements, where
appropriate for the asset being valued.
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
Purchases and sales of securities are reflected as of the trade date.
Amounts allocated to accounts of participants who have elected to withdraw
from the Plan but who were not paid as of the year-end are included in net
assets available for benefits. In 1992 and prior years, these amounts
were reflected as distributions payable in the statement of net assets
available for plan benefits and as distributions to participants in the
statement of changes in net assets available for plan benefits. In 1993,
the American Institute of Certified Public Accountants (AICPA) established
a new guideline for the treatment of these amounts. The new guideline
states that the Plan should not reflect these amounts as a liability on
the statement of net assets. The 1992 statement of net assets available
for plan benefits and the 1992 and 1991 statements of changes in net
assets available for plan benefits have therefore been restated to
retroactively reflect this accounting change. The effect of the
restatement was to reduce the benefits payable and increase net assets
available for plan benefits by $11,050,000 and $10,562,000 for 1992 and
1991, respectively.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
The Department of Labor requires these amounts to be reported as a
liability on the Form 5500. The following reconciles net assets available
for benefits between these financial statements and the Form 5500 as
December 31 (dollars in thousands):
1993 1992
----------- -----------
Net assets available for plan
benefits per financial statements $941,816 $767,471
Benefits due for participant
withdrawal/distribution (10,017) (11,050)
----------- -----------
Net assets available for Plan
benefits per Form 5500 $931,799 $756,421
=========== ===========
Similarly, the 1993 distributions to participants amount reflected in the
statement of changes in net assets available for benefits is reconciled to
the Form 5500 as follows (dollars in thousands):
1993
-----------
Distributions to participants per
financial statements $ 66,605
Benefits due:
Beginning of year (11,050)
End of year 10,017
-----------
Distributions to participants per Form 5500 $ 65,572
===========
Additionally, certain reclassifications have been made in the 1992
statement of net assets available for Plan benefits to conform to the
presentation used in 1993. There was no impact on previously reported net
assets available for Plan benefits other than the retroactive restatement
resulting from a change in accounting principle noted above.
3. Participant Accounts
--------------------
Employee deductions are credited to the employees' before tax basic
account, before tax supplemental account, after-tax basic account and
after-tax supplemental account, as appropriate. Employer matching
contributions made for the periods before March 1, 1990 were credited to
after-tax company account and before-tax company account, as appropriate.
20
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts (Continued)
--------------------------------
An employee's interest in the accounts is represented by units of
participation ("Units") in each investment fund in which the employee
participates. Monthly, a participant's account is credited with Units in
each fund to which the participant's payroll deductions have been
directed. The number of Units credited is based upon each respective
fund's current Unit value which is determined as of the end of each month.
A fund's Unit value is based upon the fair value of the underlying assets
and will reflect any unrealized appreciation or depreciation of the fund's
assets. The determination of monthly Unit values also results in an
allocation to the participant's account of a proportionate share of the
monthly earnings (or losses) of each fund based upon the extent of the
employee's participation (number of Units held) relative to the number of
Units held by all participants in the respective fund.
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts (Continued)
---------------------------------
The number and value of Units at December 31, 1993 and 1992 were as
follows:
December 31, 1993
-----------------
Number of Units
(in thousands) Value per Unit
--------------- --------------
Company Stock Fund* 98,709 $6.4582
Equity Fund 41,162 $1.0986
Interest Income Fund ** 36,856 $4.3419
Bond Fund 13,406 $1.0899
Money Market Fund 18,211 $1.0321
Balanced Fund 49,409 $1.1266
December 31, 1992
-----------------
Number of Units
(in thousands) Value per Unit
--------------- --------------
Pacific Telesis Group Shares Fund 94,387 $5.0855
Diversified Telephone Portfolio
Fund 12,970 $4.8693
Guaranteed Interest Fund 52,392 $4.0494
Communications Workers of America
Group Trust Fund 583 $1.3272
International Brotherhood of
Electrical Workers Group Trust
Fund 254 $1.3248
* Formerly known as the Pacific Telesis Group Shares Fund
** Formerly known as the Guaranteed Interest Fund
22
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Participation by Investment Direction
-------------------------------------
The number of active employees contributing to the Plan as of December 31,
1993 and 1992 by each investment direction were as follows:
December 31,
-----------------
1993 1992
------- -------
Entirely in the Company Stock Fund 13,244
Entirely in the Guaranteed Interest Fund 7,966
Equally in the Pacific Telesis Group Shares Fund
and the Guaranteed Interest Fund 9,941
Entirely in IBEW/CWA Fund 86
Entirely in the Equity Fund 410
Entirely in the Bond Fund 116
Entirely in the Money Market Fund 3,496
Entirely in the Balanced Fund 787
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 915
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 5,047
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 276
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 1,154
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 69
10% increments totalling 100% in the Equity Fund
and the Bond Fund 284
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,005
10% increments totalling 100% in the Money Market
and the Bond Fund 71
10% increments totalling 100% in the Money Market
and the Balanced Fund 165
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 161
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and Money Market Fund 177
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 403
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,552
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 125
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 224
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 246
23
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Participation by Investment Direction (Continued)
-------------------------------------------------
December
31,
-------------
- -----
1993 1992
------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 113
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 150
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 532
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 85
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 124
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 239
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 11,336
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 84
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 289
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 802
------- -------
Total Employees Contributing 30,437 31,237
======= =======
24
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Tax Status
----------
The Internal Revenue Service issued a determination letter on May 4, 1993,
stating that the Plan, as amended effective January 1, 1993, meets the
requirements of a qualified plan under Sections 401(a) and 401(k) of the
Internal Revenue Code (the "Code") and is exempt from federal income taxes
under Section 501(a) of the Code.
25
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1993, 1992 and 1991, the net appreciation (depreciation) of
investments, including both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
Diversified
Company Telephone Interest CWA/
Stock Portfolio Income IBEW
Fund Fund Fund Funds
----------- ---------- ---------- --------
<S> <C> <C> <C> <C>
1993
----
Common Stock $111,416 $ (2,072) $ - $ 2
Bank Common and Commingled Trust Funds - - - -
Insurance Contracts - - - -
----------- ---------- ---------- --------
Net Appreciation (Depreciation) $111,416 $ (2,072) $ - $ 2
=========== ========== ========== ========
1992
----
Common Stock $ (1,054) $ 6,121 $ - $ 22
Bank Common and Commingled Trust Funds - - - -
Insurance Contracts - - - -
----------- ---------- ---------- --------
Net Appreciation (Depreciation) $ (1,054) $ 6,121 $ - $ 22
=========== =========== ========== ========
1991
----
Common Stock $ (4,972) $ 2,786 $ - $ 22
Bank Common and Commingled Trust Funds - - - -
Insurance Contracts - - - -
----------- ----------- ---------- --------
Net Appreciation (Depreciation) $ (4,972) $ 2,786 $ - $ 22
=========== =========== ========== ========
</TABLE>
26
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1993, 1992 and 1991, the net appreciation (depreciation) of
investments, including both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
Money
Equity Bond Market Balanced Grand
Fund Fund Fund Fund Total
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1993
----
Common Stock $ - $ - $ - $ - $109,346
Bank Common and Commingled Trust Funds 4,175 1,154 - 5,929 11,258
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- ----------
Net Appreciation (Depreciation) $ 4,175 $ 1,154 $ - $ 5,929 $120,604
=========== ========== ========== ========== ==========
1992
----
Common Stock $ - $ - $ - $ - $ 5,089
Bank Common and Commingled Trust Funds - - - - -
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- ----------
Net Appreciation (Depreciation) $ - $ - $ - $ - $ 5,089
=========== ========== ========== ========== ==========
1991
----
Common Stock $ - $ - $ - $ - $ (2,164)
Bank Common and Commingled Trust Funds - - - - -
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- ----------
Net Appreciation (Depreciation) $ - $ - $ - $ - $ (2,164)
=========== ========== ========== ========== ==========
</TABLE>
27
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Plan Termination
----------------
The Corporation, by action of the Board of Directors, may at any time
terminate the making of deductions from pay of all participating employees
and of contributions by the Employing Company in connection with the Plan.
If at any time the profits of the Corporation and of the Subsidiaries of
the Corporation which are joined (or could be joined) with it in a
consolidated federal income tax return shall be less than twice the
combined contributions of all such companies under the Plan and the
Savings Plans since the preceding January 1, the making of deductions from
pay of all participating employees in the Plan and of contributions by the
Employing Company shall be terminated. No termination shall have the
effect of diverting the amounts held by the Trustee for purposes other
than as provided in the Plan.
Generally, following such a termination of the making of deductions and of
contributions by any Employing Company, such Employing Company may, at any
time after such termination, determine that the Plan and related trust
shall be liquidated as to such Employing Company, in which event
distribution shall be made to each of its participating employees (or the
person or persons entitled thereto) of all Units.
8. LESOP Provisions of the Plan
----------------------------
The Corporation's matching allocations are made through a trust for the
LESOP. Banker's Trust Company, as Trustee of the Pacific Telesis Group
Employee Stock Ownership Plan Master Trust, purchased 13,900,000 of the
Corporation's treasury shares at a total price of $691,052,400, or $49.25
per share plus accrued dividends, using a promissory note from the Trust
to the Corporation.
Corporate contributions and dividends will repay the principal and
interest on the LESOP loan. This will release shares of stock to be
allocated to participants' accounts equal in value to the Corporation's
matching obligation under the Plan. Shares will be valued at current
market value.
The 15-year promissory note is payable to the Corporation and matures
January 2, 2005. The terms of the note require that annual principal and
interest payments began January 2, 1991. Interest payments are based upon
a variable rate and are adjusted quarterly.
28
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
9. Related Party Transactions
--------------------------
Trustee fees, other than fees attributable to the LESOP Savings Match
Accounts, are first charged to forfeitures arising from the after-tax
Savings Plan's matching accounts (but not the LESOP's Savings Stock Match
Accounts) and the remainder is charged to the applicable Plan fund or is
prorated among all Plan funds, except the LESOP fund, whichever is
appropriate. Investment manager fees, fees charged by financial
institutions in connection with the investment of any funds under the
Plan, and certain administrative fees applicable to the Plan are charged
to the applicable Plan fund(s). Brokerage fees, transfer taxes and other
expenses incident to the purchase or sale of securities are considered
part of the cost of the securities or a reduction in the sales price.
Trustee fees and certain administrative fees with respect to the LESOP
fund are paid by the Employing Company.
29
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1993
--------------------------------------
COMPANY STOCK FUND Percent Number of
(Dollars and shares in thousands) of Shares or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
Pacific Telesis Group common
shares* 97.6%
11,590 shs $372,458 $628,746
Short-term investments 1.0% $6,426 6,426 6,426
-------- --------- ---------
Total Company Stock Fund 98.6% $378,884 $635,172
======== --------- ---------
EQUITY FUND
(Dollars and units in thousands)
December 31, 1993
---------------------------------------
Percent Number of
of Units or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
State Street S&P 500 Fund 100.4% 657 unt $41,968 $45,716
Short-term investments 1.7% $768 768 768
-------- -------- ---------
Total Equity Fund 102.1% $42,736 $46,484
======== -------- ---------
(See footnotes on page 33)
30
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1993
--------------------------------------
BOND FUND Percent Number of
(Dollars and units in thousands) of Units or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
State Street Bond Fund 99.3%
1,276 unt $13,614 $14,623
Short-term investments 2.3% $337 337 337
-------- --------- ---------
Total Bond Fund 101.6% $13,951 $14,960
======== --------- ---------
MONEY MARKET FUND
(Dollars and units in thousands)
December 31, 1993
---------------------------------------
Percent Number of
of Units or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
State Street Money Market Fund 92.5% 17,854 unt $17,854 $17,854
Short-term investments 6.7% $1,301 1,301 1,301
-------- -------- ---------
Total Money Market Fund 99.2% $19,155 $19,155
======== -------- ---------
December 31, 1993
--------------------------------------
BALANCED FUND Percent Number of
(Dollars and units in thousands) of Units or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
State Street Balanced Fund* 98.8%
4,700 unt $49,875 $55,486
Short-term investments 1.6% $887 887 887
-------- --------- ---------
Total Balanced Fund 100.4% $50,762 $56,373
======== --------- ---------
(See footnotes on page 33)
31
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
INTEREST INCOME FUND
(Dollars and shares in thousands) December 31, 1993
---------------------------------------
Percent
of
Fund Net Principal Fair
Name of Issuer and Maturity Dates Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Contracts with insurance
companies and banks:**
Connecticut General Life
Insurance Company 11.4% $18,516 $18,516 $18,516
(12/31/94-12/29/95)
CNA (06/30/94) 1.3% 2,084 2,084 2,084
Lotsoff Capital Management 5.6% 8,993 8,993 8,993
(06/30/98)
Metropolitan Life Insurance
Company* (06/30/95-12/31/97) 23.4% 37,813 37,813 37,813
Principal Mutual 5.5% 8,949 8,949 8,949
(12/31/98)
Prudential Asset Management
Group (06/30/96) 13.6% 22,072 22,072 22,072
Allstate Life Insurance Company 5.4% 8,760 8,760 8,760
(06/30/96)
John Hancock Mutual Life Insurance 12.9% 20,870 20,870 20,870
(12/31/96)
Life Insurance Co. of Georgia 6.4% 10,420 10,420 10,420
(12/31/97)
American International Life 5.2% 8,381 8,381 8,381
(06/30/97)
-------- --------- ---------
Total contracts with insurance
companies and banks 90.7% 146,858 146,858 146,858
-------- --------- ---------
Short-term investments 4.8% 7,806 7,806 7,806
-------- --------- ---------
Total Interest Income Fund 95.5% 154,664 $154,664 $154,664
======== ========= =========
GRAND TOTAL 98.4% $660,152 $926,808
======== ========== =========
(See footnotes on page 33)
32
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
- ---------------
Percentages represent the item's fair value as a percent of the applicable
fund's Net Assets Available for Plan Benefits at December 31, 1993.
* Investment represents 5% or more of the total Net Assets Available for
Plan Benefits at December 31, 1993.
** The contracts with these insurance companies, bank and financial
institutions guarantee the repayment of principal and the crediting of
interest at a composite guaranteed interest rate in the range of 7.1% to
7.6% for 1993. The volume and timing of participating employee
contributions and withdrawals may cause the actual yield to vary from this
range. The composite guaranteed interest rate for 1994 is expected to
fall within a range of approximately 6.5% to 7.0%. The rates in future
years under new contracts may be either higher or lower than these rates.
The maturity value of each contract is based on the balance of the amount
of contributed principal plus reinvested interest less distributions at
the date of maturity.
33
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Current Value
of Asset on Net
Description Number of Purchase Selling Cost of Transaction Gain/
Identity of Party Involved of Assets Transactions Price Price Asset Date (Loss)
- -------------------------- ---------------------- ------------ -------- -------- -------- ------------ -------
<S> <S> <C> <C> <C> <C> <C> <C>
Bankers Trust Pyramid Short-term
Discretionary Fund Investments 324 N/A 282,702 282,702 N/A -
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 14 N/A 16,299 10,416 N/A 5,883
State Street S&P State Street S&P
500 Fund 500 Fund 26 N/A 6,723 6,296 N/A 427
State Street State Street
Balanced Fund Balanced Fund 22 N/A 3,935 3,617 N/A 318
Bankers Trust Pyramid Short-term
Discretionary Fund Investments 365 203,204 N/A N/A 203,204 N/A
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 33 99,414 N/A N/A 99,414 N/A
State Street S&P State Street S&P
500 Fund 500 Fund 39 48,265 N/A N/A 48,265 N/A
State Street State Street
Balanced Fund Balanced Fund 44 53,491 N/A N/A 53,491 N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the same
person, 5% of the Plan net assets available for plan benefits at the beginning of the Plan year, January 1, 1993.
</TABLE>
34
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Plans Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
PACIFIC TELESIS GROUP SUPPLEMENTAL
RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
By Savings Plans Committee
By /s/ R. P. McGahan
-------------------------------
R. P. McGahan
Member of the Committee
Dated: June 16, 1994
35
<PAGE>
Exhibit 99c
Form 10-K for 1993
File No. 1-8609
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
Commission File Number 1-8609
PACTEL CORPORATION RETIREMENT PLAN
PACIFIC TELESIS GROUP
130 Kearny Street, San Francisco, California 94108
<PAGE>
TABLE OF CONTENTS
Description
Item Page
- ---- ----
1. Financial Statements and Exhibits ......................... 3
2
<PAGE>
Item 1. Financial Statements and Exhibits.
(a) Financial Statements of the Plan included herein:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Plan Benefits -
December 31, 1993 and 1992.
Statements of Changes in Net Assets Available for Plan
Benefits - for the years ended December 31, 1993, 1992
and 1991.
Notes to Financial Statements
Schedules:
Schedule I - Item 27a - Schedule of Assets Held for
Investment Purposes
Schedule II - Item 27d - Schedule of Reportable
Transactions
Other schedules are omitted because they are not
applicable or the information required is contained in
the Financial Statements.
(b) Exhibits: NONE
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PacTel Corporation Retirement Plans Committee
PacTel Corporation Retirement Plan:
We have audited the statements of net assets available for plan benefits of
the PacTel Corporation Retirement Plan as of December 31, 1993 and 1992 and
the related statements of changes in net assets available for plan benefits
for each of the three years in the period ended December 31, 1993. These
financial statements are the responsibility of the plan administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of PacTel
Corporation Retirement Plan as of December 31, 1993 and 1992 and changes in
net assets available for plan benefits for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions as of December 31,
1993 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for plan
benefits and the statements of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to
present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken
as a whole.
As discussed in Note 3, the Plan changed its method of accounting for benefits
payable.
/s/ COOPERS & LYBRAND
San Francisco, California
May 27, 1994
4
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed
PTG Stock Growth/Risk Conservative Interest
Fund) Fund) Equity Fund) Fund)
ASSETS: ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments at Fair Value (cost $73,154)
Pacific Telesis Group Common Shares $29,830 $ - $ - $ -
SIT New Beginning Growth Fund - 17,679 - -
State Street S&P 500 Index Flagship Fund - - 12,596 -
Contracts with Insurance Companies - - - 10,737
State Street Yield Plus Fund - - - -
State Street Bond Market Fund - - - -
State Street PacTel Balanced Fund - - - -
Short Term Investments - 2 2 1,928
--------- --------- --------- ---------
Total Investments 29,830 17,681 12,598 12,665
Contributions Receivable - Net of Forfeitures 1,134 829 537 21
Fund and Other Transfers Receivable - Net 902 - - -
Dividends and Interest Receivable 297 - - -
--------- --------- --------- ---------
Total Assets 32,163 18,510 13,135 12,686
--------- --------- --------- ---------
LIABILITIES:
Fund and Other Transfers Payable - Net - 112 119 489
----------- ---------- ---------- ----------
Total Liabilities - 112 119 489
----------- ---------- ---------- ----------
Net Assets Available for Plan Benefits,
December 31, 1993 $32,163 $18,398 $13,016 $12,197
=========== ========== ========== ==========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993 (Continued)
(Dollars in Thousands)
<CAPTION>
Money Balanced
Market Fund Bond Fund Fund Total
ASSETS: ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments at Fair Value (cost $73,154)
Pacific Telesis Group Common Shares $ - $ - $ - $29,830
SIT New Beginning Growth Fund - - - 17,679
State Street S&P 500 Index Flagship Fund - - - 12,596
Contracts with Insurance Companies - - - 10,737
State Street Yield Plus Fund 4,928 - - 4,928
State Street Bond Market Fund - 1,204 - 1,204
State Street PacTel Balanced Fund - - 7,188 7,188
Short Term Investments 14 3 2 1,951
--------- --------- --------- ---------
Total Investments 4,942 1,207 7,190 86,113
Contributions Receivable - Net of Forfeitures 667 112 400 3,700
Fund and Other Transfers Receivable - Net - - - 902
Dividends and Interest Receivable - - - 297
--------- --------- --------- ---------
Total Assets 5,609 1,319 7,590 91,012
--------- --------- --------- ---------
LIABILITIES:
Fund and Other Transfers Payable - Net 112 48 204 1,084
----------- ---------- ---------- ----------
Total Liabilities 112 48 204 1,084
----------- ---------- ---------- ----------
Net Assets Available for Plan Benefits,
December 31, 1993 $5,497 $1,271 $7,386 $89,928
=========== ========== ========== ==========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed
PTG Stock Growth/Risk Conservative Interest
Fund) Fund) Equity Fund) Fund)
ASSETS: ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments at Fair Value (cost $54,498)
Pacific Telesis Group Common Shares $17,082 $ - $ - $ -
SIT New Beginning Growth Fund - 13,756 - -
State Street S&P 500 Index Flagship Fund - - 9,909 -
Contracts with Insurance Companies - - - 12,061
State Street Yield Plus Fund - - - -
State Street Bond Market Fund - - - -
State Street PacTel Balanced Fund - - - -
Short Term Investments 35 - - 2,193
--------- --------- --------- ---------
Total Investments 17,117 13,756 9,909 14,254
Contributions Receivable - Net of Forfeitures 699 972 553 -
Fund and Other Transfers Receivable - Net 356 14 68 -
Dividends and Interest Receivable 208 - - -
--------- --------- --------- ---------
Total Assets 18,380 14,742 10,530 14,254
--------- --------- --------- ---------
LIABILITIES:
Fund and Other Transfers Payable - Net - - - 629
Forfeitures - Net of Contributions Receivable - - - 11
----------- ---------- ---------- ----------
Total Liabilities - - - 640
----------- ---------- ---------- ----------
Net Assets Available for Plan Benefits,
December 31, 1992 $18,380 $14,742 $10,530 $13,614
=========== ========== ========== ==========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
7
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992 (Continued)
(Dollars in Thousands)
<CAPTION>
Money Balanced
Market Fund Bond Fund Fund Total
ASSETS: ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments at Fair Value (cost $54,498)
Pacific Telesis Group Common Shares $ - $ - $ - $17,082
SIT New Beginning Growth Fund - - - 13,756
State Street S&P 500 Index Flagship Fund - - - 9,909
Contracts with Insurance Companies - - - 12,061
State Street Yield Plus Fund 1,338 - - 1,338
State Street Bond Market Fund - 462 - 462
State Street PacTel Balanced Fund - - 4,121 4,121
Short Term Investments 10 - - 2,238
--------- --------- --------- ---------
Total Investments 1,348 462 4,121 60,967
Contributions Receivable - Net of Forfeitures 940 118 488 3,770
Fund and Other Transfers Receivable - Net - 57 - 495
Dividends and Interest Receivable - - - 208
--------- --------- --------- ---------
Total Assets 2,288 637 4,609 65,440
--------- --------- --------- ---------
LIABILITIES:
Fund and Other Transfers Payable - Net 35 - 48 712
Forfeitures - Net of Contributions Receivable - - - 11
----------- ---------- ---------- ----------
Total Liabilities 35 - 48 723
----------- ---------- ---------- ----------
Net Assets Available for Plan Benefits,
December 31, 1992 $2,253 $637 $4,561 $64,717
=========== ========== ========== ==========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
8
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed Money
PTG Stock Growth/Risk Conservative Interest Market Bond Balanced
Fund) Fund) Equity Fund) Fund) Fund Fund Fund Total
--------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available
for Plan Benefits,
January 1, 1993 $18,230 $14,659 $10,459 $13,563 $2,243 $635 $4,557 $64,346
Add: Adjustment for
Cumulative Effect on
Prior Years of Applying
Retroactively the New
Method of Accounting
for Distributions
Payable (Note 3) 150 83 71 51 10 2 4 371
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Net Assets Available for
Plan Benefits, January
1, 1993, as Adjusted 18,380 14,742 10,530 13,614 2,253 637 4,561 64,717
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Employee Contributions/
Salary Deferrals 2,404 2,196 1,365 - 854 261 1,142 8,222
Employing Company
Contributions 3,469 2,936 1,839 - 2,835 393 1,593 13,065
Transfers 4,213 (1,529) (1,125) (1,348) 14 <5> <220> -
Forfeitures and
Other - Net (229) (197) (116) (275) <331> <15> <77> <1,240>
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Total Contributions 9,857 3,406 1,963 (1,623) 3,372 634 2,438 20,047
<FN>
The accompanying Notes are an integral part of the Financial Statements. (Continued)
</TABLE>
9
<PAGE>
<TABLE> PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993 (Continued)
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed Money
PTG Stock Growth/Risk Conservative Interest Market Bond Balanced
Fund) Fund) Equity Fund) Fund) Fund Fund Fund Total
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends on Pacific
Telesis Group
Common Shares 1,032 - - - - - - 1,032
Other Dividends - 26 - - - - - 26
Interest 13 - 1 1,006 120 - 1 1,141
Appreciation of
Investments - Net 4,329 1,416 1,106 - - 70 666 7,587
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Total Additions
(Deductions)
- Net 15,231 4,848 3,070 (617) 3,492 704 3,105 29,833
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Less, Distributions to
Participants (Note 3) 1,448 1,192 584 800 248 70 280 4,622
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) 13,783 3,656 2,486 (1,417) 3,244 634 2,825 25,211
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Net Assets Available
for Plan Benefits,
December 31, 1993 $32,163 $18,398 $13,016 $12,197 $5,497 $1,271 $7,386 $89,928
========== =========== ============ =========== =========== =========== =========== ===========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
10
<PAGE>
<TABLE> PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed Money
PTG Stock Growth/Risk Conservative Interest Market Bond Balanced
Fund) Fund) Equity Fund) Fund) Fund Fund Fund Total
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available
for Plan Benefits,
January 1, 1992,
as Previously Reported $15,129 $ 8,555 $ 6,747 $16,914 $ - $ - $ - $47,345
Add: Adjustment for
Cumulative Effect on
Prior Years of Applying
Retroactively the New
Method of Accounting
for Distributions
Payable (Note 3) 251 107 34 388 - - - 780
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Net Assets Available for
Plan Benefits, January
1, 1992, as Adjusted 15,380 8,662 6,781 17,302 - - - 48,125
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
Employee Contributions/
Salary Deferrals 1,746 1,477 1,053 932 435 94 449 6,186
Employing Company
Contributions 2,587 2,366 1,602 1,824 1,676 201 849 11,105
Transfers (973) 2,458 871 (5,873) 95 336 3,086 -
Forfeitures and
Other - Net (264) (40) (53) (596) 49 (2) 51 (855)
---------- ----------- ------------ ----------- ---------- ----------- ------------ -----------
Total Contributions 3,096 6,261 3,473 (3,713) 2,255 629 4,435 16,436
<FN>
The accompanying Notes are an integral part of the Financial Statements. (Continued)
</TABLE>
11
<PAGE>
<TABLE> PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1992 (Continued)
(Dollars in Thousands)
<CAPTION>
Interest
Company High Growth Income Fund
Stock Fund Fund Equity Fund (Formerly
(Formerly (Formerly (Formerly Guaranteed Money
PTG Stock Growth/Risk Conservative Interest Market Bond Balanced
Fund) Fund) Equity Fund) Fund) Fund Fund Fund Total
---------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends on Pacific
Telesis Group
Common Shares 790 - - - - - - 790
Other Dividends - 51 103 - - - - 154
Interest 11 2 4 1,286 10 - - 1,313
Appreciation of
Investments - Net 80 300 584 - - 13 151 1,128
---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Additions
(Deductions)
- Net 3,977 6,614 4,164 (2,427) 2,265 642 4,586 19,821
---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Less, Distributions to
Participants (Note 3) 977 534 415 1,261 12 5 25 3,229
---------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) 3,000 6,080 3,749 (3,688) 2,253 637 4,561 16,592
---------- ----------- ------------ ----------- ---------- ----------- ------------ -----------
Net Assets Available
for Plan Benefits,
December 31, 1992, $18,380 $14,742 $10,530 $13,614 $2,253 $637 $4,561 $64,717
as Adjusted ========== =========== ============ =========== ========== =========== ============ ===========
<FN>
The accompanying Notes are an integral part of the Financial Statements.
</TABLE>
12
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1991
(Dollars in Thousands)
PTG Growth/ Conservative Guaranteed
Stock Risk Equity Interest
Fund Fund Fund Fund Total
-------- -------- ------------ ---------- -------
Net Assets Available
for Plan Benefits,
January 1, 1991, as
Previously Reported $13,650 $4,147 $4,249 $13,577 $35,623
Add: Adjustment for
Cumulative Effect on
Prior Years of Applying
Retroactively the New
Method of Accounting
for Distributions
Payable (Note 3) 234 28 3 112 377
-------- --------- ----------- --------- --------
Net Assets Available for
Plan Benefits January
1, 1991, as Adjusted 13,884 4,175 4,252 13,689 36,000
-------- --------- ----------- --------- --------
Employee Contributions/
Salary Deferrals 1,843 718 662 1,579 4,802
Employing Company
Contributions 2,540 1,035 917 3,429 7,921
Transfers (721) 566 325 (170) -
Forfeitures and
Other - Net (181) (68) 12 (338) (575)
-------- --------- ----------- --------- --------
Total Contributions 3,481 2,251 1,916 4,500 12,148
Investment Income:
Dividends on Pacific
Telesis Group
Common Shares 586 - - - 586
Other Dividends - 32 155 - 187
Interest 40 - 4 1,364 1,408
Appreciation/(Depreciation)
of Investments - Net (61) 2,877 1,122 - 3,938
-------- --------- ----------- --------- --------
Total Additions 4,046 5,160 3,197 5,864 18,267
-------- --------- ----------- --------- --------
The accompanying Notes are an integral part of the Financial Statements.
(Continued)
13
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1991 (Continued)
(Dollars in Thousands)
PTG Growth/ Conservative Guaranteed
Stock Risk Equity Interest
Fund Fund Fund Fund Total
-------- -------- ------------ ---------- -------
Less, Distributions to
Participants (Note 3) 1,147 352 375 1,079 2,953
Net Assets Transferred
Out of the Plan
(Note 6) (1,403) (321) (293) (1,172) (3,189)
-------- --------- ----------- --------- --------
Net Increase 1,496 4,487 2,529 3,613 12,125
-------- --------- ----------- --------- --------
Net Assets Available
for Plan Benefits,
December 31, 1991,
as Adjusted $15,380 $8,662 $6,781 $17,302 $48,125
======== ========= =========== ========= ========
The accompanying Notes are an integral part of the Financial Statements.
14
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
The following description of the PacTel Corporation Retirement Plan (the
"Plan") provides only general information. Participants should refer to
the Prospectus/Summary Plan Description dated December 1991, as amended,
for a more complete description of the Plan's provisions, including the
income tax consequences of participation and restrictions on early
withdrawals from the Plan.
General:
The Plan was established by Pacific Telesis Group (the "Corporation") to
encourage employees to make and continue careers with PacTel Corporation
and other participating PacTel Corporation subsidiary companies. The Plan
was adopted on September 26, 1986 and commenced operation on January 1,
1987. The Plan is a defined contribution plan covering eligible employees
of participating subsidiary companies of PacTel Corporation or its
separate operating units participating in the Plan ("Participating
Entities").
Eligibility:
An employee is eligible to participate in the Plan if he or she (a) is an
employee of a Participating Entity, and (b) has completed at least six
consecutive months with 500 hours of service. "Leased" employees are not
eligible to participate, nor are non-resident aliens unless the
Participating Entity expressly permits otherwise.
Employee Deductions:
A participant may authorize a deduction of any whole percentage (not to
exceed 16%) of compensation. Deductions may be designated as before-tax
deductions (Salary Deferrals) or as after-tax deductions (Employee
Contributions). Any before-tax deductions reduce an employee's W-2
compensation for income tax purposes. However, they are taxable when
distributed from the Plan, and they are subject to severe restrictions on
in-service withdrawals. Before-tax deductions are limited to a maximum of
$8,994 for 1993. This maximum allowable limit is subject to annual
revision for cost-of-living increases. Before-tax deductions do not
reduce an employee's compensation for FICA withholding (i.e., Social
Security benefits) and most Participating Entity benefits.
A participant may not make more than two elections to authorize, change,
suspend or resume employee deductions in any calendar year, except that an
employee may always elect to suspend employee deductions.
15
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Participating Entity Contributions:
The Plan provides four types of Company Contributions:
(a) Basic Contributions - Each participant will receive an allocation of
Basic Contributions equal to a percentage between 0% and 6% of
compensation, depending on the rate selected by his or her
Participating Entity.
(b) Matching Contributions - Each participant will receive an allocation
of Matching Contributions equal to a percentage between 0% and 100%
of the participant's employee deductions, depending on the matching
rate selected by his or her Participating Entity. For this purpose,
employee deductions are limited to 6% of compensation.
(c) Variable Contributions - If a Participating Entity elects to make a
Variable Contribution for a calendar year, each participant who was
employed at the end of the calendar year or who has died, attained
retirement status or incurred a disability during such year will
receive an allocation of Variable Contributions based on the
proportion that his or her compensation paid by the Participating
Entity bears to the aggregate compensation paid by that entity to all
participants.
(d) QNEC Contributions - If a Participating Entity elects to make
Qualified Nonelective Contributions (QNEC), each non-highly
compensated participant employed by that entity will receive a QNEC
allocation.
Investment Directions:
A participant's own deductions and share of Company Contributions will be
remitted to the Trustee for investment under the Plan. A participant may
direct the investment of his or her deductions and share of Company
Contributions in increments of ten percent in one or more of the following
Investment Funds (see note 2 for changes made to the Plan in 1992):
(a) The Company Stock Fund;
(b) The High Growth Fund;
(c) The Equity Fund;
(d) The Money Market Fund;
(e) The Bond Fund; and
(f) The Balanced Fund.
16
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
---------------------------
Investment Directions: (Continued)
Effective July 1, 1992 future deductions and Company Contributions cannot
be invested in the Interest Income Fund.
A participant may, as of the first business day of any month, change
investment directions as to future deductions and allocations of Company
Contributions and may redirect the investment of his or her total account
among the six investment funds, however, three months must pass between
each such change. The election to make changes must be made at least 15
days before the effective date of the change. Effective July 1, 1992,
future deductions and Company Contributions cannot be directed into the
Interest Income Fund. Account balances may still be directed out of the
Interest Income Fund, however, subject to certain restrictions (See Note
2).
The participant's interest in the investment funds is represented by
dollar units based on the fair market value of the underlying assets.
Assets are valued as of the last business day of each calendar month.
Vesting:
Employee deductions are always fully vested and nonforfeitable. Company
Contributions are fully vested and nonforfeitable if, before the
participant terminates employment, the participant dies, becomes disabled
or attains age 65, receives payment from the Company's Separation Pay
Plan, or the Plan is terminated or partially terminated.
Company Contributions which do not so vest become vested and
nonforfeitable pursuant to the following schedule:
Years of Service Vested Percentages
---------------- ------------------
Less than 3 years ....................... 0%
3 years but less than 4 years ........... 60%
4 years but less than 5 years ........... 80%
5 or more years ......................... 100%
A participant receives credit for a year of service for each calendar year
in which at least 1000 hours of service are completed. Company
Contributions which are not yet vested will be forfeited when the
participant terminates employment.
17
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
In-Service Withdrawals:
While still an employee, a participant can withdraw all or part ($250
minimum) of the value of his or her Rollover Account and/or Employee
Contribution Account. Additionally, a participant who is 100% vested in
his or her Matching Account may withdraw all or part ($250 minimum) of
such account. Withdrawals from the Salary Deferral Account can be made by
participants over 59 1/2 or by participants who have incurred a serious
financial hardship. Other than withdrawals from the Salary Deferral
Account, a participant cannot make more than two withdrawals in any period
of 12 consecutive months. A participant who makes a withdrawal from any
account other than the Salary Deferral Account is not eligible to receive
Matching Contributions for a six-month period, regardless of the
participant's age. A participant under the age of 59 1/2 who makes a
withdrawal from the Salary Deferral Account is not eligible to receive
Matching Contributions for a six-month period. Participants over age
59 1/2 who receive withdrawals from their Salary Deferral Accounts
continue to be eligible to receive Matching Contributions. All
withdrawals are made pro rata from the various investment types.
Withdrawals made before age 59 1/2 may be subject to tax penalty.
Payments on Termination of Employment:
If a participant terminates employment after he or she is fully vested in
all accounts, the entire amount in his or her accounts will be distributed
in a single sum to the participant or, in the case of the participant's
death, to the participant's beneficiary. If a participant terminates
employment before he or she is fully vested in all accounts, the vested
portion of such accounts will be distributed in a single sum and the non-
vested portion will be forfeited. A participant or beneficiary may elect
to receive the single sum distribution as of the close of the calendar
month in which termination of employment or death occurred. If the value
of the participant's account exceeds $3,500, the participant may elect to
receive the distribution on any later date no later than April 1 following
the calendar year the participant reaches 70 1/2, and a beneficiary may
elect to receive the distribution on any later date no later than five
years after the participant's death. However, if the beneficiary is the
participant's spouse, the beneficiary may elect to receive the
distribution on the latest date that the participant could have elected to
receive the distribution. If the value of a participant's account does
not exceed $3,500, the participant or his or her beneficiary will receive
the distribution as of the close of the calendar month in which
termination of employment or death occurred.
18
<PAGE>
PACTEL CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Method of Distribution and Withdrawal:
A participant's vested Plan Benefit shall be distributed in the form of a
single lump sum in cash, except that, if any portion of the Plan Benefit
is invested in the Company Stock Fund, the participant may elect to
receive such Plan Benefit in whole shares of Pacific Telesis Group stock
and cash for any fractional shares.
Forfeitures:
If a participant ceases to be an employee before becoming 100% vested in
Company accounts, the non-vested portion of each Company account
constitutes a forfeiture during the plan year in which the employment
terminated. Forfeitures arising from Company Contributions other than the
Variable Contribution are applied in the following order:
(a) to restore allocations for participants improperly excluded from such
allocations.
(b) to restore forfeitures for reinstated employees; and
(c) to reduce future Company Contributions.
Forfeitures arising from the Variable Contribution are added to current
year's Variable Contribution.
Restoration of Forfeited Amounts:
Forfeitures will be restored to the participant's accounts if the
participant is reemployed before incurring a permanent service break (five
consecutive calendar years during which the participant does not complete
more than 500 hours of service in each calendar year). Reinstatement is
made from other forfeitures of former employees of the Participating
Entity which reemployed the participant.
Beneficiaries:
A participant may designate one or more beneficiaries to receive a
distribution in case of his or her death.
Statements of Account:
Statements are prepared and distributed quarterly.
Voting:
A participant will have the right to instruct the Trustee how to vote the
shares of Pacific Telesis Group stock allocated to the participant's
account under the Company Stock Fund.
19
<PAGE>
PACTEL CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Acceptance of Tax-Free Rollovers:
Participants or Eligible Employees may make a rollover of the taxable
portion of a qualified total distribution from a former employer's
qualified plan by contributing all or part of that portion in cash to this
plan within sixty days of the distribution. The rollover does not qualify
for a Matching Contribution.
2. Changes in the Plan
-------------------
Effective July 1, 1992, three new investment funds were added (The Money
Market Fund, The Bond Fund and The Balanced Fund) and the following
changes were made:
The previously existing investment funds changed names as follows:
The Guaranteed Interest Fund became The Interest Income Fund
The PTG Stock Fund became The Company Stock Fund
The Conservative Equity Fund became The Equity Fund
The Growth/Risk Fund became The High Growth Fund
The Interest Income Fund ceased receiving new contributions and incoming
investment transfers. Participants will not be permitted to transfer from
the Interest Income Fund to either the Money Market Fund or the Bond Fund.
Participants will not be permitted to transfer amounts to an investment
fund if, at the same time, an amount was transferred from such investment
fund.
3. Accounting Policies
-------------------
The fair value of investments is determined as follows:
- Shares or equivalent shares in the Company Stock Fund are reported on
the basis of the last published sales price per share at month end as
reported on the New York Stock Exchange composite tape.
- The High Growth Fund, the Equity Fund, the Money Market Fund, the Bond
Fund and the Balanced Fund own units of investment funds held by the
investment manager. The underlying investments are valued based on
published sources where available or, if not available, from other
sources considered reliable.
- Contracts with insurance companies in the Interest Income Fund are
based on principal plus reinvested interest, less distributions.
- Short term investments are valued by the trustee at cost, which
approximates market.
20
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Accounting Policies (Continued)
-------------------------------
Purchases and sales of securities and units of investment funds are
reflected as of the trade date.
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
Expenses of the Plan, with the exception of the SIT New Beginning Growth
Fund, are paid directly by the Corporation and, as such, are not
reflected in the accounts of the Plan. However, brokerage fees, transfer
taxes and other fees incident to the purchase and sale of securities are
deemed part of the cost of the securities or shall be deducted from the
sale proceeds, as the case may be. Fees charged by the SIT New Beginning
Growth Fund are in accordance with the fund's prospectus.
Realized gains or losses and the change in unrealized appreciation
(depreciation) of the investments of the Plan are presented in the
statement of changes in net assets available for plan benefits as
appreciation/(depreciation) of investments - net.
Amounts allocated to accounts of participants who have elected to withdraw
from the Plan but have not been paid as of the year-end are included in
net assets available for benefits. In 1992 and prior years, these amounts
were reflected as distributions payable in the statement of net assets
available for Plan benefits and as distributions to participants in the
statement of changes in net assets available for Plan benefits. In 1993,
the American Institute of Certified Public Accountants ("AICPA")
established a new guideline for the treatment of amounts allocated to
accounts of participants who have elected to withdraw from the Plan but
who have not yet been paid as of the year-end. The new guideline states
that the Plan should not reflect these amounts as liabilities on the
financial statements. The 1992 statement of net assets available for Plan
benefits and the 1992 and 1991 statements of changes in net assets
available for Plan benefits have therefore been restated to reflect
retroactively this accounting change. The effect of the restatement was
to reduce the benefits payable and increase net assets available for Plan
benefits by $371,000 as of December 31, 1992.
21
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Accounting Policies (Continued)
-------------------------------
As the Department of Labor requires these amounts to be reported as a
liability on the Form 5500, the following reconciles net assets available
for benefits between these financial statements and the Form 5500 as of
December 31:
1993 1992
--------- ---------
(000s) (000s)
Net assets available for Plan
benefits per financial statements $89,928 $64,717
Benefits due for participant
withdrawal/distribution (532) (371)
--------- ---------
Net assets available for Plan
benefits per Form 5500 $89,396 $64,346
========= =========
Similarly, the 1993 distributions to participants amount reflected in the
statement of changes in net assets available for benefits is reconciled to
the Form 5500 as follows:
1993
---------
(000s)
Distributions to participants per
financial statements $ 4,622
Benefits due:
Beginning of year (371)
End of year 532
---------
Distributions to participants per Form 5500 $ 4,783
=========
22
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Participant Accounts
--------------------
At December 31, 1993, approximately 3,656 employees of PacTel Corporation
and other Participating Entities were participating in the Plan. The
number of employees of the Corporation and its subsidiaries participating
by investment direction, as described in Article 11 of the Plan text in
the Prospectus was:
December 31,
------------------
1993 1992
------- -------
Company Stock Fund 2,234 1,886
High Growth Fund 1,804 1,749
Equity Fund 1,465 1,424
Interest Income Fund 1,570 1,926
Money Market Fund 1,653 1,348
Bond Fund 425 344
Balanced Fund 1,068 986
As indicated in Note 1, Participants can direct their investments to any
number of Funds except the Interest Income Fund. The above table includes
all Participants in each Fund, including those who are in more than one
Fund. As a result, the total exceeds the number of Participants in the
Plan.
5. Tax Status
----------
The Plan obtained its latest determination letter in 1989, in which the
Internal Revenue Service ("IRS") stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code ("IRC"). The Plan has been amended since receiving the 1989
determination letter and no new determination letter has been received
from the IRS. However, the Plan administrator and the Plan's tax counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
6. Net Assets Transferred Into and Out of the Plan
-----------------------------------------------
During 1991, the Corporation sold certain business units to Northern
Telecom, Inc. As a result, the net assets relating to certain
participants were transferred to the Northern Telecom Employee
Thrift/Savings Plan during 1991.
23
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Spin-off
--------
In December 1992, Pacific Telesis Group announced that its Board of
Directors had approved a plan to separate PacTel Corporation from its
other businesses through a distribution to its shareowners of all of the
common stock of PacTel Corporation held by Pacific Telesis Group. In
connection with the separation, PacTel Corporation completed an Initial
Public Offering of common stock in December, 1993. On April 1, 1994,
Pacific Telesis Group distributed all of its remaining interest in PacTel
Corporation in a one-for-one distribution to its shareowners. PacTel
Corporation changed its name to AirTouch Communications at that time.
At the time of the spin-off, AirTouch Communications became the sponsor of
the PacTel Corporation Retirement Plan. All the assets and liabilities of
the PacTel Corporation Retirement Plan as sponsored by Pacific Telesis
Group were transferred to the Plan as sponsored by AirTouch Communications
as of April 29, 1994. The value of each Participants' Accounts under
AirTouch Communications sponsorship as of the date of transfer was equal
to the value of the Participants' Accounts under Pacific Telesis Group
sponsorship as of such date.
24
<PAGE>
SCHEDULE I
PACTEL CORPORATION RETIREMENT PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
COMPANY STOCK FUND
(Formerly PTG Stock Fund)
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
Pacific Telesis Group
Common Shares 92.7%** 550 shs $ 22,978 $ 29,830
----------- -------- --------
Total Company Stock Fund 92.7% 22,978 29,830
=========== -------- --------
HIGH GROWTH FUND
(Formerly Growth/Risk Fund)
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
SIT New Beginning Growth Fund 96.1%** 1,396 shs 14,016 17,679
Short Term Investments - $ 2 2 2
----------- -------- --------
Total High Growth Fund 96.1% 14,018 17,681
=========== -------- --------
EQUITY FUND
(Formerly Conservative Equity Fund)
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
State Street S&P 500
Index Flagship Fund 96.8%** 181 shs 11,012 12,596
Short Term Investments - $ 2 2 2
----------- -------- --------
Total Equity Fund 96.8% 11,014 12,598
- --------------------------------- =========== -------- --------
(* & ** see footnotes on page 27)
25
<PAGE>
SCHEDULE I
PACTEL CORPORATION RETIREMENT PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
INTEREST INCOME FUND
(Formerly Guaranteed Interest Fund)
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
Contracts with Insurance
Companies:
Metropolitan Life
Insurance Company*** 30.1% $3,672 3,672 3,672
John Hancock Mutual Life
Insurance Company*** 26.2% $3,200 3,200 3,200
Provident Life & Accident
Insurance Company*** 16.1% $1,965 1,965 1,965
Mutual Life Insurance Company
of New York*** 15.6% $1,900 1,900 1,900
Short Term Investments 15.8% $1,928 1,928 1,928
----------- -------- --------
Total Interest Income Fund 103.8% 12,665 12,665
=========== -------- --------
MONEY MARKET FUND
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
State Street Yield
Plus Fund 89.6%** $4,928 4,928 4,928
Short Term Investments .3% $ 14 14 14
----------- -------- --------
Total Money Market Fund 89.9% 4,942 4,942
- --------------------------------- =========== -------- --------
(*, ** & *** see footnotes on pages 27 and 28)
26
<PAGE>
SCHEDULE I
PACTEL CORPORATION RETIREMENT PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
BOND FUND
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
State Street Bond
Market Fund 94.7% 105 shs 1,130 1,204
Short Term Investments .2% $ 3 3 3
----------- -------- --------
Total Bond Fund 94.9% 1,133 1,207
- --------------------------------- =========== -------- --------
BALANCED FUND
(Dollars and Shares in Thousands)
December 31, 1993
----------------------------------------
Number of
Percentage Shares or
of Fund Principal Fair
Name of Issuer and Title of Issue Net Assets* Amount Cost Value
- --------------------------------- ----------- ----------- -------- --------
State Street PacTel
Balanced Fund 97.3%** 608 shs 6,402 7,188
Short Term Investments - $ 2 2 2
----------- -------- --------
Total Balanced Fund 97.3% 6,404 7,190
- --------------------------------- =========== -------- --------
GRAND TOTAL ALL FUNDS 95.7% $ 73,154 $ 86,113
- --------------------------------- =========== ======== ========
Footnotes:
- ----------
* Percentages represent the item's fair value as a percent of the
applicable fund's Net Assets Available for Plan Benefits at December
31, 1993.
** Investment represents 5% or more of the total Plan Net Assets Available
for Benefits at December 31, 1993.
27
<PAGE>
SCHEDULE I
PACTEL CORPORATION RETIREMENT PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (Continued)
Footnotes (Continued):
- ----------------------
*** The contracts with Metropolitan Life Insurance Company, John Hancock
Mutual Life Insurance Company, Provident Life & Accident Insurance
Company and Mutual Life Insurance Company of New York provide for the
repayment of principal and the crediting of interest at a composite
effective annual interest rate. At December 31, 1993, the contract with
Metropolitan Life Insurance Company had a balance of $3,672,000 at 8.9%
with maturity dates of December 31, 1993 and 1995. The contract with
John Hancock Mutual Life Insurance Company had a balance of $3,200,000
at 6.61% with maturity dates of December 31, 1993, December 30, 1994,
December 29, 1995 and December 31, 1996. The Provident Life & Accident
Insurance Company contract had a balance of $1,965,000 at 6.44% with
maturity dates of December 31, 1996 and 1997. The contract with Mutual
life Insurance Company of New York, with a maturity date of December 31,
1994, had a balance of $1,900,000 at 8.46%. The timing of remittance of
contributions and other participating employee-directed transactions may
cause the actual yield to vary from these rates. The composite interest
rate in future years may be higher or lower upon entering new contracts.
The Moody's Investors Service, Inc. ratings for each of the insurance
companies as of May, 1994 are as follow:
Company Rating
----------------------------------------- ------
Metropolitan Life Insurance Company Aa1
John Hancock Mutual Life Insurance Company Aa2
Provident Life & Accident Insurance Company Aa3
Mutual Life Insurance Company of New York Baa1
The above ratings reflect the views of the rating agency. There is no
assurance that such ratings will continue for any period of time or that
they will not be changed or withdrawn. Explanations for the above
ratings are as follow:
Aa Insurance companies rated Aa offer excellent financial security.
Together with the Aaa group they constitute what are generally known
as high grade companies. They are rated lower than Aaa companies
because long-term risks appear somewhat larger.
Baa Insurance companies rated Baa offer adequate financial security.
However, certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating category from Aa to B. The modifier 1 represents the
higher end of the category, the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates a lower end ranking.
28
<PAGE>
<TABLE>
SCHEDULE II
PACTEL CORPORATION RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(Dollars in Thousands)
<CAPTION>
Current Value
of Asset as of
Identity of Number of Purchase Selling Cost of December 31, Net
Party Involved Description of Assets Transactions Price Price Asset 1993 Gain
- --------------------- --------------------- ------------ ---------- ---------- --------- -------------- ----------
<S> <S> <C> <C> <C> <C> <C> <C>
State Street Yield Plus Fund 96 $ 3,933 N/A N/A $ 3,933 N/A
State Street Yield Plus Fund 17 N/A $ 343 $ 343 N/A -0-
Pacific Telesis
Group Common Shares 80 $ 8,708 N/A N/A $ 9,243 N/A
SIT Investment New Beginning Growth
Advisers Fund 18 $ 5,045 N/A N/A $ 5,307 N/A
SIT Investment New Beginning Growth
Advisors Fund 23 N/A $ 2,146 $ 1,703 N/A $443
State Street S&P 500 Index Flagship
Fund 14 $ 2,863 N/A N/A $ 2,863 N/A
State Street S&P 500 Index Flagship
Fund 22 N/A $ 1,282 $ 1,139 N/A $143
State Street Collective Short Term
Investment Fund 316 $26,153 N/A N/A $26,153 N/A
State Street Collective Short Term
Investment Fund 349 N/A $26,288 $26,288 N/A -0-
<FN>
Note: The above transactions exceed 5%, individually or in the aggregate for a series of transactions involving the same
person, of the PacTel Corporation Retirement Plan net assets available for plan benefits at the beginning of the Plan
year January 1, 1993.
</TABLE>
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Retirement Plans Committee has duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
PACTEL CORPORATION RETIREMENT PLAN
By PacTel Corporation Retirement
Plans Committee
By /s/ R. P. McGahan
-----------------------------
R. P. McGahan
Member of the Committee
Dated: June 16, 1994
30
