<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, 1994 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 May 26, 1995 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.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried Employees for
the year 1994.
99c Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried Employees
for the year 1994.
99d Annual report on Form 11-K for the PacTel Corporation Retirement
Plan for the period January 1, 1994 to April 1, 1994.
2
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- ------------------------------------------------------
23a Consent of Coopers & Lybrand.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried Employees for
the year 1994.
99c Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried Employees
for the year 1994.
99d Annual report on Form 11-K for the PacTel Corporation Retirement
Plan for the period January 1, 1994 to April 1, 1994.
3
<PAGE>
Exhibit 23a
Form 10-K for 1994
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: Stock Incentive Plan
of our reports dated May 17, 1995 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 January 12, 1995 on our
audit of the PacTel Corporation Retirement Plan as of April 1, 1994 and
December 31, 1993 and for the period January 1, 1994 to April 1, 1994 and the
accompanying supplemental schedules of assets held for investment purposes and
reportable transactions as of April 1, 1994, filed as part of Exhibits 99b,
99c and 99d, respectively, to the Annual Report on Form 10-K of
Pacific Telesis Group for the year ended December 31, 1994.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
May 17, 1995
Exhibit 99b
Form 10-K for 1994
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, 1994
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, 1994 and 1993
Statements of Changes in Net Assets Available for Plan
Benefits For the Years Ended December 31, 1994, 1993 and
1992
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 (the "Plan") as of December 31, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the changes in net assets
available for plan benefits for each of the three years in the period ended
December 31, 1994, 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,
1994 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 benefits payable in 1993.
/s/ Coopers & Lybrand L.L.P.
San Francisco, California
May 17, 1995
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1994
<CAPTION> (Dollars in thousands)
Company AirTouch Interest
Stock Stock Equity Income Bond
ASSETS: Fund Fund Fund Fund Fund
---------- ---------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Investments at fair value (cost $1,150,976)
Pacific Telesis Group common shares $332,047 $ - $ - $ - $ -
AirTouch shares - 298,431 - - -
State Street S&P 500 Fund - - 305,135 - -
State Street Long Bond Fund - - - - 30,067
State Street Money Market Fund - - - - -
State Street Balanced Fund - - - - -
Contracts with insurance companies and banks - - - 212,421 -
Short-term investments 4,377 1,695 1,173 16,956 191
--------- --------- --------- --------- --------
Total Investments 336,424 300,126 306,308 229,377 30,258
Employee contribution receivable 1,442 (36) 1,433 - 173
Fund and other transfers receivable - net 124 (41) 912 - -
Dividends and interest receivable 6,364 5 2 645 -
Receivable for investments sold - - - 7,996 -
--------- --------- --------- --------- ----------
Total Assets 344,354 300,054 308,655 238,018 30,431
--------- --------- --------- --------- ----------
LIABILITIES:
Fund and other transfers payable - net 644 205 - 201 170
Payable for investments purchased - - - - -
Fees payable 68 52 83 45 9
--------- --------- --------- --------- ----------
Total Liabilities 712 257 83 246 179
--------- --------- --------- --------- ----------
Net assets available for Plan benefits $343,642 $299,797 $308,572 $237,772 $30,252
<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, 1994
<CAPTION> (Dollars in thousands)
Money
Market Balanced Grand
ASSETS: Fund Fund Total
---------- ----------- ----------
<S> <C> <C> <C>
Investments at fair value (cost $1,150,976)
Pacific Telesis Group common shares $ - $ - $332,047
AirTouch shares - - 298,431
State Street S&P 500 Fund - - 305,135
State Street Long Bond Fund - - 30,067
State Street Money Market Fund 62,252 - 62,252
State Street Balanced Fund - 202,585 202,585
Contracts with insurance companies and banks - - 212,421
Short-term investments 979 622 25,993
---------- ----------- ----------
Total Investments 63,231 203,207 1,468,931
Employee contribution receivable 442 1,063 4,517
Fund and other transfers receivable - net 558 114 1,667
Dividends and interest receivable 291 1 7,308
Receivable for investments sold - - 7,996
---------- ----------- ----------
Total Assets 64,522 204,385 1,490,419
---------- ----------- ----------
LIABILITIES:
Fund and other transfers payable - net - 242 1,462
Payable for investments purchased 290 - 290
Fees payable 16 54 327
---------- ----------- ----------
Total Liabilities 306 296 2,079
---------- ----------- ----------
Net assets available for Plan benefits $64,216 $204,089 $1,488,340
========== =========== ==========
<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, 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>
7
<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>
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, 1994
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Equity Income Bond
Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1994, $593,005 - $295,043 $247,676 $34,034
----------- ----------- ----------- ----------- -----------
Employee contributions 20,665 (24) 19,949 - 2,604
Investment income:
Dividends on Pacific Telesis Group common shares 24,848 - - - -
Interest 134 40 14 15,633 2
Net appreciation (depreciation) of investments (Note 6) (145,171) 176,142 4,355 - (918)
Transfers of participants' balances, net (115,697) 108,104 13,678 (8,118) (1,446)
----------- ----------- ----------- ----------- -----------
Total Additions (Deductions), net (215,221) 284,262 37,996 7,515 242
Less: Distributions to participants (Note 2) 33,766 (15,769) 24,118 17,145 3,978
Fees 376 234 349 274 46
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (249,363) 299,797 13,529 (9,904) (3,782)
----------- ----------- ----------- ----------- -----------
Net assets available for Plan benefits, December 31, 1994 $343,642 $299,797 $308,572 $237,772 $30,252
=========== =========== =========== =========== ===========
<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, 1994
(Dollars in thousands)
<CAPTION>
Money
Market Balanced Grand
Fund Fund Total
----------- ----------- -----------
<S> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1994 $54,074 $188,212 $1,412,044
----------- ----------- -----------
Employee contributions 6,124 14,959 64,277
Investment income:
Dividends on Pacific Telesis Group common shares - - 24,848
Interest 2,289 12 18,124
Net appreciation (depreciation) of investments (Note 6) - 2,371 36,779
Transfers of participants' balances, net 9,278 16,804 22,603
----------- ----------- -----------
Total Additions (Deductions), net 17,691 34,146 166,631
Less: Distributions to participants (Note 2) 7,471 18,018 88,727
Fees 78 251 1,608
----------- ----------- -----------
Net increase (decrease) 10,142 15,877 76,296
----------- ----------- -----------
Net assets available for Plan benefits, December 31, 1994 $64,216 $204,089 $1,488,340
=========== =========== ===========
<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, 1993
<CAPTION> (Dollars in thousands)
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>
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, 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
Fee 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>
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, 1992
<CAPTION> (Dollars in thousands)
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>
13
<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
<CAPTION> (Dollars in thousands)
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 distribution
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>
14
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
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 1995, $9,240 for 1994 and
$8,994 for 1993). Salary eligible for deductions is limited to an
annual maximum, adjusted for inflation ($150,000 for 1995, $150,000
for 1994 and $235,840 for 1993).
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.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Effective April 1, 1994, AirTouch Communications, Inc. (ATI)
(formerly, PacTel Corporation) and its subsidiaries separated their
corporate affiliation with the Corporation and its other subsidiaries.
Effective as of March 21, 1994, the record date, each shareowner of
Pacific Telesis Group shares became a shareowner of ATI with
eligibility to receive one ATI share for each share of Pacific Telesis
Group.
Effective March 31, 1994, the Corporation has amended the Plan to add
a new investment fund, the ATI Stock Fund. This new fund was
established as of the record date and consisted initially of the ATI
shares attributable to the shares of Pacific Telesis Group held in the
Company Stock Fund and ATI common shares transferred from the LESOP.
The Plan will allow fund transfers out of the ATI 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 ATI 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.
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.
17
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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, after-tax basic
deductions 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.
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-1992 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.
18
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 certain circumstances, in two annual installments.
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 ATI Stock Fund.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 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.
20
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
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, and ATI common shares in the ATI Stock Fund 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 Global
Advisors, 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.
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 accounting 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.
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
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 statement of changes in net assets available for plan
benefits therefore have 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 for 1992.
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):
1994 1993
------------ -------------
Net assets available for plan benefits
per financial statements $1,488,340 $1,412,044
Benefits due for participant
withdrawal/distribution (19,503) (10,432)
------------ ------------
Net assets available for Plan benefits
per Form 5500 $1,468,837 $1,401,612
============ ============
Similarly, the 1994 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):
1994
-------
Distributions to participants per financial statements $88,727
Benefits due:
Beginning of year (10,432)
End of year 19,503
-------
Distributions to participants per Form 5500 $97,798
=======
22
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
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.
The number and value of Units at December 31, 1994 and 1993 were as
follows:
December 31, 1994
-----------------
Number of Units
(in thousands) Value per Unit
---------------- --------------
Company Stock Fund* 94,851 $ 3.5828
AirTouch Stock Fund 86,947 $ 3.4075
Equity Fund** 28,942 $10.4982
Interest Income Fund *** 52,771 $ 4.4489
Bond Fund 26,930 $ 1.1057
Money Market Fund 56,579 $ 1.1058
Balanced Fund 169,982 $ 1.1868
* Formerly known as the Pacific Telesis Group Shares Fund
** Formerly known as the Diversified Equity Portfolio Fund
*** Formerly known as the Guaranteed Interest Fund
23
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts (Continued)
--------------------------------
December 31, 1993
-----------------
Number of Units
(in thousands) Value per Unit
-------------- --------------
Company Stock Fund* 92,363 $ 6.3707
Equity Fund** 28,253 $10.3683
Interest Income Fund *** 58,827 $ 4.1724
Bond Fund 29,644 $ 1.1377
Money Market Fund 50,458 $ 1.0647
Balanced Fund 159,521 $ 1.1743
* 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, 1994 and 1993 by each investment direction were as follows:
December 31,
-----------------
1994 1993
-------- --------
Entirely in the Company Stock Fund 2,439 2,689
Entirely in the Equity Fund 947 1,083
Entirely in the Bond Fund 25 40
Entirely in the Money Market Fund 496 580
Entirely in the Balanced Fund 627 705
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 984 1,043
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 630 761
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 44 51
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 467 471
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 209 272
10% increments totalling 100% in the Equity Fund
and the Bond Fund 104 134
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,371 1,414
10% increments totalling 100% in the Money Market
and the Bond Fund 31 41
10% increments totalling 100% in the Money Market
and the Balanced Fund 94 100
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 87 107
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Money Market Fund 332 363
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 64 73
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,097 1,054
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 19 20
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 104 95
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 62 79
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,
-----------------
1994 1993
-------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 38 47
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 139 145
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 366 441
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 48 61
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 20 25
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 165 137
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 265 275
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 24 19
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 149 189
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 301 279
-------- --------
Total Employees Contributing 11,748 12,793
======== ========
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. The plan has been amended since
receiving the determination letter and a determination letter request is
pending with the IRS at this time which would cover the Plan as amended.
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, 1994, 1993 and 1992, the net appreciation (depreciation) of investments, including
both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
Diversified Diversified
AirTouch Telephone Government Equity
Stock Company Portfolio Obligations Portfolio Equity
Fund Stock Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1994
----
Common Stock $176,142 $(145,171) $ - $ - $ - $ -
Bank Common and Commingled Trust Funds - - - - - 4,335
Insurance Contracts - - - - - -
----------- ----------- ----------- ----------- ----------- ----------
Net Appreciation (Depreciation) $176,142 $(145,171) $ - $ - $ - $ 4,355
=========== =========== =========== =========== =========== ==========
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
=========== =========== =========== =========== =========== ==========
</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, 1994, 1993 and 1992, 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>
1994
----
Common Stock $ - $ - $ - $ - $ 30,971
Bank Common and Commingled Trust Funds - (918) - 2,371 5,808
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation $ - $ (918) $ - $ 2,371 $ 36,779
=========== =========== =========== =========== ==========
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
=========== =========== =========== =========== ==========
</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 current or accumulated
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.
8. LESOP Provisions of the Plan
----------------------------
See LESOP notes to financial statements under Plan Description, Section A.
General and Section C. Participant Accounts.
9. Related Party Transactions
--------------------------
Trustee fees, other than fees attributable to the LESOP Savings Match
Accounts, are charged to the applicable Plan fund or prorated among all
Plan funds, except the LESOP fund, as 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.
10. Subsequent Event
----------------
Subsequent to year-end, the market value of Pacific Telesis Group common
shares have declined by at least 10%. This decline is a result of the
competition in the local toll service market. Due to the decline in
revenues in the first quarter of 1995 and the resulting decrease in the
value of Pacific Telesis Group's common stock, the value of the plan's
assets could change significantly during 1995.
30
<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, 1994
----------------------------------------
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* 96.6% 11,651 shs $239,733 $332,047
Short-term investments 1.3% $4,377 4,377 4,377
--------- --------- ----------
Total Company Stock Fund 97.9% $244,110 $336,424
========= --------- ----------
AIRTOUCH STOCK FUND
(Dollars and units in thousands) December 31, 1994
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- --------- ---------- --------- ---------
AirTouch Communications common
shares* 99.5% 10,247 shs $143,549 $298,431
Short-term investments 0.6% $1,695 1,695 1,695
-------- --------- ---------
Total AirTouch Stock Fund
100.1% $145,244 $300,126
======== --------- ---------
EQUITY FUND
(Dollars and units in thousands) December 31, 1994
----------------------------------------
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* 98.9% 4,324 unt $261,977 $305,135
Short-term investments 0.4% $1,173 1,173 1,173
-------- -------- ----------
Total Equity Fund 99.3% $263,150 $306,308
======== -------- ----------
(* See footnote on page 34.)
31
<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, 1994
----------------------------------------
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 99.4% 2,693 unt $27,822 $30,067
Short-term investments 0.6% $191 191 191
-------- -------- ----------
Total Bond Fund 100.0% $28,013 $30,258
======== -------- ----------
MONEY MARKET FUND
(Dollars and units in thousands) December 31, 1994
----------------------------------------
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 96.9% 62,252 unt $62,252 $62,252
Short-term investments 1.5% $979 979 979
-------- -------- ----------
Total Money Market Fund 98.4% $63,231 $63,231
======== -------- ----------
BALANCED FUND
(Dollars and units in thousands) December 31, 1994
----------------------------------------
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* 99.3% 16,964 unt $177,229 $202,585
Short-term investments 0.3% $622 622 622
-------- -------- ----------
Total Balanced Fund 99.6% $177,851 $203,207
======== -------- ----------
(* See footnote on page 34.)
32
<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, 1994
(Dollars and shares in thousands) ---------------------------------------
Percent
of Fund
Name of Issuer, Maturity Net Principal Fair
Date and Rate of Interest Assets Amount Cost Value
--------------------------------- -------- --------- --------- ----------
Contracts with insurance
companies and banks:
John Hancock (12/31/96) 5.0% $ 11,927 $ 11,927 $ 11,927
Metropolitan Life Insurance
Company (06/30/95) 9.5% 6.0% 14,313 14,313 14,313
Metropolitan Life Insurance
Company (06/30/96) 7.8% 5.1% 12,051 12,051 12,051
The Mutual Benefit Life
Insurance Company ** 0.5% 1,256 1,256 1,256
Connecticut General Life
Insurance Company
(12/29/95) 4.2% 8.3% 19,795 19,795 19,795
Life Insurance of Georgia 3.7% 8,764 8,764 8,764
(12/31/97) 6.9%
Provident National Assurance 5.8% 13,848 13,848 13,848
Company (12/31/97) 6.3%
AETNA (12/31/98) 5.7% 6.3% 15,065 15,065 15,065
Lotsoff Capital Management
(06/30/98) 7.0% 8.9% 21,099 21,099 21,099
Allstate Insurance Company
(06/30/96) 9.2% 13.7% 32,446 32,446 32,446
CitiBank (12/31/97) 5.0% 5.7% 13,648 13,648 13,648
Prudential Asset Management
Group (06/30/96) 8.0% 2.7% 6,330 6,330 6,330
American International Life
(06/30/97) 6.2% 2.7% 6,354 6,354 6,354
Prudential Asset Management
Group (12/31/98) 5.3% 5.3% 12,618 12,618 12,618
Prudential Asset Management
Group (06/30/99) 7.0% 6.3% 14,947 14,947 14,947
Provident National Assurance
Company (01/02/98) 6.6% 3.3% 7,960 7,960 7,960
-------- ---------- ----------
Total contracts with insurance
companies and banks 89.3% 212,421 212,421 212,421
-------- ---------- ----------
Short-term investments 7.1% 16,956 16,956 16,956
-------- ---------- ----------
Total Interest Income Fund 96.4% 229,377 229,377 229,377
======== ---------- ----------
GRAND TOTAL 98.7% $1,150,976 $1,468,931
======== ========== ==========
(** See footnote on page 34).
33
<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, 1994.
* Investment represents 5% or more of the total Net Assets Available for
Plan Benefits at December 31, 1994.
** 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.
34
<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, 1994
(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 370 N/A $249,824 $249,824 N/A -
Pacific Telesis Group Pacific Telesis Group
common shares common shares 16 N/A 15,064 9,953 N/A 5,111
Bankers Trust Pyramid Short-term
Discretionary Cash Fund Investments 442 263,277 N/A N/A 263,277 N/A
Pacific Telesis Group Pacific Telesis Group
common shares common shares 37 60,612 N/A N/A 60,612 N/A
Pacific Telesis Group Pacific Telesis Group
common shares common shares 1 N/A N/A N/A 137,585* N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the same
person, or securities of the same issue, 5% of the Plan net assets available for plan benefits at the beginning
of the Plan year, January 1, 1994.
* Item represents the spin-off of AirTouch Communications, Inc. (formerly, PacTel Corporation).
</TABLE>
35
<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 (the "Plan") as
of December 31, 1994 and 1993, 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, 1994 and 1993,
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, 1994, 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 in 1993.
/s/ Coopers & Lybrand L. L. P.
San Francisco, California
May 17, 1995
36
<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, 1994 and 1993
(Dollars in thousands)
ASSETS
1994 1993
--------- ---------
Investment - at fair value
Pacific Telesis Group Common Shares,
Cost $632,245 and $667,645 for 1994
and 1993, respectively)(Note 3) $590,806 $727,853
Employer Receivable 45,729 67,561
Dividend Receivable 11,298 7,312
Short-Term Investments 41 4
--------- ---------
Total Assets 647,874 802,730
--------- ---------
LIABILITIES
Benefits Payable (Note 2) -
Interest Payable 10,264 6,052
Note Payable (Note 7) 347,954 444,105
--------- ---------
Total Liabilities 358,218 450,157
--------- ---------
Net Assets Available For Plan Benefits $289,656 $352,573
========= =========
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Net Assets Allocated to Participants $265,569 $302,562
Net Assets Available for
Future Allocations 24,087 50,011
--------- ---------
Net Assets Available
For Plan Benefits $289,656 $352,573
========= =========
The accompanying notes are an integral part of the financial statements.
37
<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, 1994 and 1993
(Dollars in thousands)
1994 1993
--------- ---------
Net Assets Available for Plan Benefits, January 1,
as previously reported $352,573 $139,079
Add: Adjustment for the cumulative effect on prior
years of applying retroactively the next method
of accounting for benefits payable (Note 2)2) - 1,826
--------- ---------
Net Assets Available for Plan Benefits, January 1,
as adjusted 352,573 140,905
--------- ---------
Additions to Net Assets Attributed to:
Investment Income
Dividends on Pacific Telesis Group Common Shares 39,297 29,402
Interest Income 618 3
Net Appreciation (Depreciation) of
Investments (Note 4) (48,342) 133,544
Employer Contributions for Loan Repayment 57,695 76,567
--------- ---------
Total Additions 49,268 239,516
--------- ---------
Deductions from Net Assets Attributed to:
Distributions to Participants 89,278 12,113
Interest Expense 22,907 15,735
Administrative Expenses - -
--------- ---------
Total Deductions 112,185 27,848
--------- ---------
Net Increase (62,917) 211,668
--------- ---------
Net Assets Available for Plan Benefits,
December 31 $289,656 $352,573
========= =========
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
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
A. General
The Pacific Telesis Group (the "Corporation") originally adopted a
leveraged employee stock ownership plan (the "LESOP"), effective
December 1, 1989, in conjunction with the two existing Savings
Plans. On December 28, 1989, the LESOP 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).
Effective April 1, 1994, AirTouch Communications, Inc. (ATI)
(formerly PacTel Corporation) separated from Pacific Telesis Group.
Consequently, the Plan was amended to reflect that for each share of
Pacific Telesis Group common stock held by the Plan as of March 21,
1994, the Plan received an equivalent number of shares of common
stock of ATI. Participants had the option of transferring the ATI
stock in their account to the ATI Stock Fund in the Savings Plan; or
converting the ATI stock to Pacific Telesis Group stock.
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 are matched by using Employing Company contributions
made to the Plan 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.
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.
39
<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)
----------------------------
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 1994 plan year was $66,084,176. 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. The IRS issued a private letter ruling to Telesis
providing that Telesis shares purchased with the sale proceeds of
ATI shares received in conjunction with the spin-off may be treated
as shares purchased with the Plan loan. 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 are
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.
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.
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)
----------------------------
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, 1994, 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.
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 accounting 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.
41
<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)
------------------------------------------
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.
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):
1994 1993
------------ ------------
Net assets available for plan
benefits per financial statements $289,656 $352,573
Benefits due for participant
withdrawal/distribution (6,100) (2,661)
------------ ------------
Net assets available for Plan
benefits per Form 5500 $283,556 $349,912
============ ============
Similarly, the 1994 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):
1994
------------
Distributions to participants per financial statements $89,278
Benefits due:
Beginning of year (2,661)
End of year 6,100
------------
Distributions to participants per Form 5500 $92,717
============
42
<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, 1994 and 1993, total investment, including shares
in the Savings Stock Match account and shares held in the suspense
account, is as follows (Dollars in thousands):
Fair
1994 Units Cost Value
---- ---------- -------- --------
Savings Stock Match Account 9,142,067 $277,249 $260,549
Suspense Account 11,587,975 354,997 330,257
---------- -------- --------
Total 20,730,042 $632,246 $590,806
========== ======== ========
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
========== ======== ========
4. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1994 and 1993 the net appreciation
(depreciation) of investments, including both net realized and
unrealized amounts, was as follows (Dollars in thousands):
1994 1993
---------- ----------
Common Stock $(48,342) $133,544
========== ==========
5. Tax Status
----------
The Internal Revenue Service issued an initial determination letter for
the LESOP on May 4, 1993, and issued a subsequent letter on March 1,
1995 stating that the Plan as amended effective as of 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.
43
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
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 current or accumulated
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.
7. Note Payable
------------
The 15-year promissory note is payable to the Corporation and matures
January 2, 2005. The interest rate on the note is based on the
London Interbank Offered Rate (LIBOR) and is adjusted quarterly. The
Plan paid $18,695,000 and $20,596,000 in interest and $96,151,000 and
$85,156,000 in principal on the outstanding loan balance during the
year ended December 31, 1994 and 1993, respectively.
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.
44
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS (Continued)
9. Subsequent Event
----------------
Subsequent to year-end, the market value of Pacific Telesis Group
common shares have declined by at least 10%. This decline is a result
of the competition in the local toll service market. Due to the
decline in revenues in the first quarter of 1995 and the resulting
decrease in the value of Pacific Telesis Group's common stock, the
value of the Plan's assets could change significantly during 1995.
45
<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, 1994
(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 92 N/A 195,911 195,911 N/A -
Pacific Telesis Group Pacific Telesis Group
common shares common shares 26 N/A 17,712 16,648 N/A 1,064
Pacific Telesis Group
common shares Pacific Telesis Group
common shares 93 247,534 N/A N/A 247,534 N/A
Bankers Trust Pyramid
Directed Account Short-term
Cash Fund Investments 77 195,948 N/A N/A 195,948 N/A
AirTouch Communication AirTouch Communication
common shares common shares 51 N/A 250,309 204,987 N/A 45,322
Pacific Telesis Group Pacific Telesis Group
common shares common shares 1 N/A N/A N/A 263,517* N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the same
person, or securities of the same issue, 5% of the Plan net assets available for plan benefits at the beginning
of the Plan year, January 1, 1994.
* Item represents the spin-off of AirTouch Communications, Inc. (formerly, PacTel Corporation).
</TABLE>
46
<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 SALARIED EMPLOYEES
By Savings Plans Committee
By /s/ R. P. McGahan
-------------------------------
R. P. McGahan
Member of the Committee
Dated: June 14, 1995
47
<PAGE>
Exhibit 99c
Form 10-K for 1994
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, 1994
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, 1994 and 1993
Statements of Changes in Net Assets Available for Plan
Benefits For the Years Ended December 31, 1994, 1993 and
1992
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 (the "Plan") as of December 31, 1994 and
1993, 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, 1994.
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, 1994 and 1993, and the changes in net
assets available for plan benefits for each of the three years in the period
ended December 31, 1994, 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,
1994 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 benefits payable in 1993.
/s/ Coopers & Lybrand L. L. P.
San Francisco, California
May 17, 1995
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1994
<CAPTION> (Dollars in thousands)
Company AirTouch Interest
Stock Stock Income Equity
ASSETS: Fund Fund Fund Fund
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value (cost $784,213)
Pacific Telesis Group common shares $393,633 $ - $ - $ -
AirTouch common shares - 317,441 - -
State Street S&P 500 Fund - - - -
State Street Long Bond Fund - - - 57,704
State Street Money Market Fund - - - -
State Street Balanced Fund - - - -
Contracts with insurance companies and banks - - 140,057 -
Short-term investments 5,009 3,283 13,211 1,105
----------- ----------- ---------- ----------
Total Investments 398,642 320,724 153,268 58,809
Employee contributions receivable 272 (2) - 65
Fund and other transfers receivable - net (81) (41) - 312
Dividends and interest receivable 7,545 9 814 1
Receivable for investments sold - - - -
----------- ----------- ---------- ----------
Total Assets 406,378 320,690 154,082 59,187
----------- ----------- ---------- ----------
LIABILITIES:
Fund and other transfers payable - net 605 75 42 -
Payable for investments purchased - - - -
Fees payable 153 112 59 24
----------- ----------- ---------- ----------
Total Liabilities 758 187 101 24
----------- ----------- ---------- ----------
Net assets available for Plan benefits $405,620 $320,503 $153,981 $59,163
=========== =========== ========== ==========
<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, 1994
<CAPTION> (Dollars in thousands)
Money
Bond Market Balanced Grand
ASSETS: Fund Fund Fund Total
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value (cost $784,213)
Pacific Telesis Group common shares $ - $ - $ - $393,633
AirTouch common shares - - - 317,441
State Street S&P 500 Fund - - - 57,704
State Street Long Bond Fund 14,629 - - 14,629
State Street Money Market Fund - 31,722 - 31,722
State Street Balanced Fund - - 69,572 69,572
Contracts with insurance companies and banks - - - 140,057
Short-term investments 371 1,647 1,932 26,558
----------- ---------- ---------- ----------
Total Investments 15,000 33,369 71,504 1,051,316
Employee contributions receivable (Forfeiture credits) 18 99 68 520
Fund and other transfers receivable - net 7 473 98 768
Dividends and interest receivable - 148 1 8,518
Receivable for investments sold - - - -
----------- ---------- ---------- ----------
Total Assets 15,025 34,089 71,671 1,061,122
----------- ---------- ---------- ----------
LIABILITIES:
Fund and other transfers payable - net - - - 722
Payable for investments purchased - 147 - 147
Fees payable 7 12 30 397
----------- ---------- ---------- ----------
Total Liabilities 7 159 30 1,266
----------- ---------- ---------- ----------
Net assets available for Plan benefits $15,018 $33,930 $71,641 $1,059,856
=========== ========== ========== ==========
<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, 1993
<CAPTION> (Dollars in thousands)
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>
7
<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>
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, 1994
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Income Equity
Fund Fund Fund Fund
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Net assets available for Plan benefits, January 1, 1994 $644,174 $ - $161,925 $45,531
----------- ----------- ---------- ---------
Employee contributions 45,058 $ 6 - 9,069
Investment income:
Dividends on Pacific Telesis Group common shares 28,477 - - -
Interest 209 31 10,124 4
Net appreciation (depreciation) of investments (Note 6) (157,015) 187,202 - 1,056
Transfers of participants' balances, net (115,691) 118,896 (4,123) 7,257
----------- ----------- ---------- ---------
Total Additions (198,962) 306,135 6,001 17,386
Less: Distributions to participants (Note 2) 38,809 (14,977) 13,603 3,630
Fees 783 609 342 124
----------- ----------- ---------- ---------
Net increase (238,554) 320,503 (7,944) 13,632
----------- ----------- ---------- ---------
Net assets available for Plan benefits, December 31, 1994 $405,620 $320,503 $153,981 $59,163
=========== =========== ========== =========
<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, 1994
(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, 1994 $14,725 $19,298 $56,159 $941,812
----------- ----------- ---------- ---------
Employee contributions 3,396 13,811 10,312 81,652
Investment income:
Dividends on Pacific Telesis Group common shares - - - 28,477
Interest 2 1,030 6 11,406
Net appreciation (depreciation) of investments (Note 6) (389) - 931 31,785
Transfers of participants' balances, net (1,564) 4,190 9,322 18,287
----------- ---------- --------- ---------
Total Additions 1,445 19,031 20,571 171,607
Less: Distributions to participants (Note 2) 1,111 4,332 4,939 51,447
Fees 41 67 150 2,116
----------- ---------- --------- ---------
Net increase 293 14,632 15,482 118,044
----------- ---------- --------- ---------
Net assets available for Plan benefits, December 31, 1994 $15,018 $33,930 $71,641 $1,059,856
=========== ========== ========= =========
<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, 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>
11
<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>
12
<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
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>
13
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
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.
Employee deductions on a before-tax basis are limited to an annual
maximum, adjusted for inflation ($9,240 for 1995, $9,240 for 1994 and
$8,994 for 1993). Pay eligible for deductions is limited to an
annual maximum, adjusted for inflation ($245,000 for 1995, $242,280
for 1994 and $235,840 for 1993).
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.
14
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 funds.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Effective April 1, 1994, AirTouch Communications, Inc. (ATI) (formerly,
PacTel Corporation) and its subsidiaries separated their corporate
affiliation with the Corporation and its other subsidiaries. Effective
as of March 21, 1994, the record date, each shareowner of Pacific
Telesis Group shares became a shareowner of ATI with eligibility to
receive one ATI share for each share of Pacific Telesis Group.
Effective March 31, 1994, the Corporation has amended the Plan to add a
new investment fund, the ATI Stock Fund. This new fund was established
as of the record date and consisted initially of the ATI shares
attributable to the shares of Pacific Telesis Group held in the Company
Stock Fund and ATI common shares transferred from the LESOP. The Plan
will allow fund transfers out of the ATI 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 ATI
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 nonforfeit-
able. 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.
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.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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, after-tax basic
deductions 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.
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-1992 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.
17
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 certain circumstances, in two annual installments.
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 ATI Stock Fund.
18
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 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.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
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, and ATI common shares in the ATI Stock Fund 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 Global Advisors, 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.
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 accounting 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.
20
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Summary of Accounting Policies (Continued)
------------------------------------------
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
statement of changes in net assets available for plan benefits therefore
have 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 for 1992.
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):
1994 1993
----------- -----------
Net assets available for plan benefits
per financial statements $1,059,856 $941,816
Benefits due for participant
withdrawal/distribution (36,555) (10,017)
----------- -----------
Net assets available for Plan benefits
per Form 5500 $1,023,301 $931,799
=========== ===========
Similarly, the 1994 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):
1994
-----------
Distributions to participants per financial statements $51,447
Benefits due:
Beginning of year (10,017)
End of year 36,555
-----------
Distributions to participants per Form 5500 $77,985
===========
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
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.
The number and value of Units at December 31, 1994 and 1993 were as
follows:
December 31, 1994
-----------------
Number of Units
(in thousands) Value per Unit
--------------- --------------
Company Stock Fund* 108,041 $3.6277
AirTouch Stock Fund 89,866 $3.4559
Equity Fund 51,331 $1.1122
Interest Income Fund ** 32,263 $4.6237
Bond Fund 13,646 $1.0576
Money Market Fund 29,634 $1.0707
Balanced Fund 60,045 $1.1384
* 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)
3. Participant Accounts (Continued)
--------------------------------
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
* Formerly known as the Pacific Telesis Group Shares Fund
** Formerly known as the Guaranteed Interest Fund
23
<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, 1994 and 1993 by each investment direction were as follows:
December 31,
-----------------
1994 1993
------- -------
Entirely in the Company Stock Fund 10,375 0
Entirely in the Equity Fund 404 410
Entirely in the Bond Fund 79 116
Entirely in the Money Market Fund 2,975 3,496
Entirely in the Balanced Fund 775 787
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 1,001 915
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 4,499 5,047
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 237 276
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 1,229 1,154
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 71 69
10% increments totalling 100% in the Equity Fund
and the Bond Fund 218 284
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,076 1,005
10% increments totalling 100% in the Money Market
and the Bond Fund 51 71
10% increments totalling 100% in the Money Market
and the Balanced Fund 151 165
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 118 161
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and Money Market Fund 193 177
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 321 403
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,719 1,552
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 111 125
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 243 224
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 213 246
24
<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,
------------------
1994 1993
------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 79 113
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 164 150
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 438 532
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 69 85
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 117 124
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 273 239
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 755 11,336
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 65 84
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 230 289
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 930 802
------- -------
Total Employees Contributing 29,179 30,437
======= =======
25
<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. The plan has been amended since
receiving the determination letter and a determination letter request is
pending with the IRS at this time which would cover the Plan as amended.
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, 1994, 1993 and 1992, the net appreciation (depreciation) of
investments, including both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION> Diversified
Company AirTouch Telephone Interest CWA/
Stock Stock Portfolio Income IBEW
Fund Fund Fund Fund Funds
----------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
1994
----
Common Stock $(157,015) $187,202 $ - $ - $ -
Bank Common and Commingled Trust Funds - - - - -
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- --------
Net Appreciation (Depreciation) $(157,015) $187,202 $ - $ - $ -
=========== ========== ========== ========== ========
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
=========== ========== ========== ========== ========
</TABLE>
27
<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, 1994, 1993 and 1992, 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>
1994
----
Common Stock $ - $ - $ - $ - $ 30,187
Bank Common and Commingled Trust Funds 1,056 (389) - 931 1,598
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- ----------
Net Appreciation (Depreciation) $ 1,056 $ (389) $ - $ 931 $ 31,785
=========== ========== ========== ========== ==========
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
=========== ========== ========== ========== ==========
</TABLE>
28
<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 current or accumulated 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.
8. LESOP Provisions of the Plan
----------------------------
See LESOP notes to financial statements under Plan Description Section
A. General and Section C. Participant Accounts.
9. Related Party Transactions
--------------------------
Trustee fees, other than fees attributable to the LESOP Savings Match
Accounts, are charged to the applicable Plan fund or prorated among all
Plan funds, except the LESOP fund, as 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.
10. Subsequent Event
----------------
Subsequent to year-end, the market value of Pacific Telesis Group
common shares have declined by at least 10%. This decline is a result
of the competition in the local toll service market. Due to the
decline in revenues in the first quarter of 1995 and the resulting
decrease in the value of Pacific Telesis Group's common stock, the
value of the plan's assets could change significantly during 1995.
29
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1994
--------------------------------------
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* 97.0% 13,812 shs $299,004 $393,633
Short-term investments 1.2% $5,009 5,009 5,009
-------- --------- ---------
Total Company Stock Fund 98.2% $304,013 $398,642
======== --------- ---------
AIRTOUCH STOCK FUND
(Dollars and units in thousands)
December 31, 1994
---------------------------------------
Percent Number of
of Units or
Fund Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ---------
Airtouch Communications common
shares* 99.0% 10,899 shs $156,076 $317,441
Short-term investments 1.0% $3,283 3,283 3,283
-------- -------- ---------
Total Equity Fund 100.0% $159,359 $320,724
======== -------- ---------
EQUITY FUND
(Dollars and units in thousands)
December 31, 1994
---------------------------------------
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* 97.5% 817 unt $53,229 $57,704
Short-term investments 1.9% $1,105 1,105 1,105
-------- -------- --------
Total Equity Fund 99.4% $54,334 $58,809
======== ------- -------
(* See footnote 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, 1994
--------------------------------------
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 97.4% 1,310 unt $14,145 $14,629
Short-term investments 2.5% $371 371 371
-------- --------- ---------
Total Bond Fund 99.9% $14,516 $15,000
======== --------- ---------
MONEY MARKET FUND
(Dollars and units in thousands)
December 31, 1994
---------------------------------------
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 93.5% 31,722 unt $31,722 $31,722
Short-term investments 4.9% $1,647 1,647 1,647
-------- -------- ---------
Total Money Market Fund 98.4% $33,369 $33,369
======== -------- ---------
December 31, 1994
--------------------------------------
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* 97.1% 5,825 unt $63,422 $69,572
Short-term investments 2.7% $1,932 1,932 1,932
-------- --------- ---------
Total Balanced Fund 99.8% $65,354 $71,504
======== --------- ---------
(* See footnote 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, 1994
---------------------------------------
Percent
of
Name of Issuer, Maturity Fund Net Fund Net Principal Fair
Date and Rate of Interest Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Contracts with insurance
companies and banks:
Connecticut General Life
Insurance Company (12/29/95) 4.2%
3.1% $4,839 $4,839 $4,839
Citibank (12/31/97) 5.0% 13.4% 20,628 20,628 20,628
Lotsoff Capital Management
(06/30/98) 7.2% 9.4% 14,436 14,436 14,436
Metropolitan Life Insurance
Company (06/30/95) 8.6% 1.9% 2,908 2,908 2,908
Metropolitan Life Insurance
Company (06/30/95) 9.4% 9.5% 14,654 14,654 14,654
Metropolitan Life Insurance
Company (12/31/97) 7.3% 7.1% 10,876 10,876 10,876
Principal Mutual
(12/31/98) 5.6% 5.4% 8,320 8,320 8,320
Prudential Asset Management
Group (06/30/96) 7.9% 10.2% 15,648 15,648 15,648
Allstate Life Insurance Company
(06/30/96) 9.1% 5.5% 8,419 8,419 8,419
John Hancock Mutual Life Insurance
(12/31/96) 6.4% 7.5% 11,548 11,548 11,548
Life Insurance Co. of Georgia
(12/31/97) 7.0% 6.4% 9,820 9,820 9,820
American International Life
(06/30/97) 6.7% 4.6% 7,115 7,115 7,115
Provident National Assurance
Company (01/02/98) 6.6% 7.0% 10,846 10,846 10,846
-------- --------- ---------
Total contracts with insurance
companies and banks 91.0% 140,057 140,057 140,057
-------- --------- ---------
Short-term investments 8.6% 13,211 13,211 13,211
-------- --------- ---------
Total Interest Income Fund 99.6% 153,268 $153,268 $153,268
======== ========= =========
GRAND TOTAL 99.2% $784,213 $1,051,316
======== ========== =========
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, 1994.
* Investment represents 5% or more of the total Net Assets Available for
Plan Benefits at December 31, 1994.
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, 1994
(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 390 N/A 210,923 210,923 N/A -
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 8 N/A 7,657 5,550 N/A 2,107
AirTouch Communication AirTouch Communication
Common Shares Common Shares 32 N/A 64,984 37,446 N/A 27,538
Bankers Trust Pyramid Short-Term Investments
Discretionary Fund 433 219,957 N/A N/A 219,957 N/A
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 44 88,744 N/A N/A 88,744 N/A
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 1 N/A N/A N/A 152,207* N/A
<FN>
Note: The above transactions exceed, individually or in the aggregate for a series of transactions involving the
same person, or securities of the same issue, 5% of the Plan net assets available for plan benefits at the
beginning of the Plan year, January 1, 1994.
* Item represents the spin-off of AirTouch Communications, Inc. (formerly, PacTel Corporation).
</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 14, 1995
35
<PAGE>
Exhibit 99d
Form 10-K for 1994
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, 1994
Commission File Number 1-8609
-----------------
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
130 Kearny Street, San Francisco, CA 94108
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the PacTel Corporation Retirement Plans Committee
and the PacTel Corporation Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits with fund information of the PacTel Corporation Retirement Plan (as
sponsored by Pacific Telesis Group) (the "Plan") as of April 1, 1994 and
December 31, 1993, and the related statement of changes in net assets
available for benefits with fund information for the period January 1, 1994
to April 1, 1994. 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 benefits of the Plan
as of April 1, 1994 and December 31, 1993 and the changes in net assets
available for benefits for the period January 1, 1994 to April 1, 1994 in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of
reportable (5%) transactions for the period January 1, 1994 to April 1, 1994
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 fund information in the statements of net assets available for benefits
and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedule 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.
/s/ Coopers & Lybrand L. L. P.
San Francisco, California
January 12, 1995
2
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of April 1, 1994
<CAPTION> (dollars in thousands)
Company High Interest Money
Stock Growth Equity Income Market Bond Balanced
ASSETS: Fund Fund Fund Fund Fund Fund Fund Total
---------- ----------- ---------- ---------- ---------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at fair value:
Pacific Telesis Group common shares - - - - - - - -
SIT New Beginning Growth Fund - - - - - - - -
State Street S&P 500 Index
Flagship Fund - - - - - - - -
Contracts with insurance companies - - - - - - - -
State Street Yield Plus Fund - - - - - - - -
State Street Bond Market Fund - - - - - - - -
State Street PacTel Balanced Fund - - - - - - - -
Short-term investments - - - - - - - -
---------- ----------- ---------- ---------- ---------- ----------- ---------- -------
Total investments - - - - - - - -
Contributions receivable -
net of forfeitures - - - - - - - -
Fund and other transfers
receivable - net - - - - - - - -
Dividends and interest receivable - - - - - - - -
---------- ---------- ---------- ---------- ---------- ----------- ---------- -------
Total assets - - - - - - - -
---------- ---------- ---------- ---------- --------- ----------- ---------- -------
LIABILITIES
Fund and other transfers payable - net - - - - - - - -
---------- ---------- ---------- ---------- --------- ----------- ---------- -------
Total liabilities - - - - - - - -
---------- ---------- ---------- ---------- --------- ----------- ---------- -------
Net assets available for plan benefits - - - - - - - -
========== ========== ========== ========== ========= =========== ========== =======
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
3
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
as of December 31, 1993
<CAPTION> (dollars in thousands)
Company High Interest Money
Stock Growth Equity Income Market Bond Balanced
ASSETS: Fund Fund Fund Fund Fund Fund Fund Total
-------- --------- --------- --------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at fair value:
Pacific Telesis Group common shares $29,830 $ - $ - $ - $ - $ - $ - $29,830
SIT New Beginning Growth Fund - 17,679 - - - - - 17,679
State Street S&P 500 Index Flagship Fund - - 12,596 - - - - 12,596
Contracts with insurance companies - - - 10,737 - - - 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 - 2 2 1,928 14 3 2 1,951
------- ------- ------- ------ ------ ------ ------ ------
Total investments 29,830 17,681 12,598 12,665 4,942 1,207 7,190 86,113
Contributions receivable -
net of forfeitures 1,134 829 537 21 667 112 400 3,700
Fund and other transfers
receivable - net 902 - - - - - - 902
Dividends and interest receivable 297 - - - - - - 297
------- ------- ------- ------- ------- ------- ------- -------
Total assets 32,163 18,510 13,135 12,686 5,609 1,319 7,590 91,012
------- ------- ------- ------- ------- ------- ------- -------
LIABILITIES
Fund and other transfers payable - net - 112 119 489 112 48 204 1,084
------- ------- ------- ------ ------ ------ ------ ------
Total liabilities - 112 119 489 112 48 204 1,084
------- ------- ------- ------ ------ ------ ------ ------
Net assets available for plan benefits $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>
4
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
for the period January 1, 1994 to April 1, 1994
(dollars in thousands)
<CAPTION>
Company High Interest Money
Stock Growth Equity Income Market Bond Balanced
Fund Fund Fund Fund Fund Fund Fund Total
---------- ----------- ---------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for benefits,
December 31, 1993 $ 32,163 $ 18,398 $ 13,016 $ 12,197 $ 5,497 $ 1,271 $ 7,386 $ 89,928
---------- ----------- ---------- --------- ---------- -------- ------- --------
Employee Contributions/Salary
Deferrals 1,138 778 509 - 222 100 397 3,144
Employing Company Contributions 1,206 799 526 - 602 110 420 3,663
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Total contributions 2,344 1,577 1,035 - 824 210 817 6,807
Interest income 6 - - 217 45 - - 268
Depreciation of investment - net (1,074) (935) (504) - - (29) (158) (2,700)
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Total additions - net 1,276 642 531 217 869 181 659 4,375
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Less distributions to participants (483) (230) (163) (180) (63) (19) (81) (1,219)
Forfeitures and other - net (41) (125) (37) (48) (106) (8) (28) (393)
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Net increase (decrease)
before transfers 752 287 331 (11) 700 154 550 2,763
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Interfund transfers - net 49 (84) 104 (66) (1) (93) 91 -
Plan transfer (Note 5) (32,964) (18,601) (13,451) (12,120) (6,196) (1,332) (8,027) (92,691)
---------- ----------- ---------- ---------- ---------- -------- ------- --------
Net assets available for
benefits, April 1, 1994 - - - - - - - -
========== =========== ========== ========== ========== ======== ======= ========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
----------------
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 effective 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). It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
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 percent) 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
restrictions on in-service withdrawals. Before-tax deductions are
limited to a maximum of $9,240 for 1994. 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 in total to either
authorize, change, suspend or resume employee deductions in any calendar
year, except that an employee may always elect to suspend employee
deductions.
6
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
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 zero and six percent 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 zero and 100 percent 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 six percent of compensation.
(c) Variable Contributions - If a Participating Entity elects to
make a Variable Contribution for a calendar year, each
participant who w as 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 nonhighly
compensated participant employed by that entity will receive a
QNEC allocation. The allocation will be a percentage of the
participant's compensation or a fixed dollar amount per
eligible participant.
7
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Investment Directions
---------------------
A participant's own deductions and share of Company contributions will
be remitted to The Northern Trust Company (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:
(a) The Company Stock Fund
(b) The High Growth Fund
(c) The Equity Fund
(d) The Money Market Fund
(e) The Bond Fund
(f) The Balanced 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. 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.
The participant's interest in the investment funds, except for the
Interest Income Fund, 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. The participant's interest in the
Interest Income Fund is reported at contract value.
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.
8
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
Company contributions which do not so vest become vested and
nonforfeitable pursuant to the following schedule:
Vested
Years of Service 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 1,000 hours of service are completed. Company
contributions which are not yet vested will be forfeited when the
participant terminates employment.
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 percent
vested in his or her Matching Account may withdraw all or part ($250
minimum) of such account. Withdrawals from the participants' account
can be made by participants over the age of 59 or by participants who
have incurred a serious financial hardship. Other than withdrawals
from the participants' 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 participants'
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 who makes a withdrawal from the participants' account is
not eligible to receive Matching Contributions for a six-month period.
Participants over the age of 59 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 the age of 59 may be
subject to tax penalty.
9
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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 nonvested 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
the age of 70 , 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.
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.
If a participant ceases to be an employee before becoming 100 percent
vested in Company accounts, the nonvested 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.
10
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Plan Description (Continued)
----------------------------
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.
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 60 days of the distribution. The rollover does not
qualify for a Matching Contribution.
2. Accounting Policies
-------------------
The fair value of investments is determined as follows:
o 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.
11
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
2. Accounting Policies (Continued)
-------------------------------
o 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.
o Short term investments are valued by the Trustee at cost, which
approximates market.
Contracts with insurance companies in the Interest Income Fund are
reported at contract value which is principal plus reinvested interest,
less distributions.
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 High 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 High 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 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.
12
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
2. 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:
December 31,
1993
------------
(in thousands)
Net assets available for Plan benefits per
financial statements $ 89,928
Benefits due for participant withdrawal/distribution (532)
----------
Net assets available for Plan benefits per Form 5500 $ 89,396
==========
Similarly, the distributions to participants amount reflected in the
statement of changes in net assets available for benefits is reconciled
to the Form 5500 as follows:
For the
Period Ended
April 1, 1994
--------------
(in thousands)
Distributions to participants per financial statements $ 1,219
Benefits due:
Beginning of period (532)
---------
Distributions to participants per Form 5500 $ 687
=========
13
<PAGE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Participant Accounts
--------------------
At April 1, 1994, approximately 3,724 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, was:
April 1, December 31,
1994 1993
--------- ------------
Company Stock Fund 2,539 2,234
High Growth Fund 2,050 1,804
Equity Fund 1,672 1,465
Interest Income Fund 1,692 1,570
Money Market Fund 1,767 1,653
Bond Fund 473 425
Balanced Fund 1,190 1,068
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.
4. 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 a determination letter request is pending with
the IRS at this time which would cover the Plan as amended.
5. Plan Transfer
-------------
Effective April 1, 1994, PacTel Corporation was spun off from Pacific
Telesis Group and renamed AirTouch Communications (AirTouch).
Effective with the spin off, AirTouch adopted the AirTouch
Communications Retirement Plan (the AirTouch Plan) which is
substantially similar to the PacTel Corporation Retirement Plan (the
PacTel Plan). Concurrently, Pacific Telesis Group transferred its
obligations as sponsor of the PacTel Plan to AirTouch and the
associated assets and liabilities were transferred to the AirTouch
Plan. These financial statements reflect the activity of the PacTel
Plan up to and including the transfer of the assets and liabilities to
the AirTouch Plan on April 1, 1994. All other transactions occurring
on April 1, 1994, are transactions of the AirTouch Plan.
14
<PAGE>
<TABLE>
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
ITEM 27d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS
for the period January 1, 1994 to April 1, 1994
<CAPTION>
Current
Expense Value of
Incurred Asset on Net
Purchase Selling Lease With Cost Transaction Gain/
Identity of Party Involved Description of Assets Price Price Rental Transaction of Asset Date (Loss)
- -------------------------- --------------------- -------- ------- ------ ----------- ----------- ----------- ------
<S> <S> <C> <C> <C> <C> <C> <C> <C>
Pacific Telesis Group Common Stock 48,205.61
shares bought in 21
transactions $55.23* - - $1,278 $2,662,378 $2,662,378 -
47,338.61 shares sold
in two transactions - $51.75* - 2,449 2,027,395 2,449,776 $419,932
Northern Trust Co. Collective short-term
investment fund
66 purchases 1 - - - 9,563,228 9,563,228 -
73 sales - 1 - - 8,713,068 8,713,068 -
* Average price
15
<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.
PACTEL CORPORATION RETIREMENT PLAN
(AS SPONSORED BY PACIFIC TELESIS GROUP)
By Savings Plans Committee
By /s/ R. P. McGahan
-------------------------------
R. P. McGahan
Member of the Committee
Dated: June 14, 1995
16
</TABLE>
