<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, 1995 on Form 10-K as set forth in the pages attached
hereto:
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Pacific Telesis Group
Dated: June 26, 1996 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, L.L.P.
99a Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried Employees
for the year 1995.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried Employees
for the year 1995.
1
<PAGE>
EXHIBIT INDEX
Exhibits identified in parentheses below, on file with the SEC, are
incorporated herein by reference as exhibits hereto.
Exhibit
Number Description
- ------- ------------------------------------------------------
23a Consent of Coopers & Lybrand L.L.P.
99a Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried Employees
for the year 1995.
99b Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried
Employees for the year 1995.
2
<PAGE>
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-3: Pacific Telesis Group and Pacific Telesis Financing I, II, and
III, $1 billion of Trusts' Preferred Securities and Other
Securities
Form S-4: ABI American Businessphones, Inc. Merger
Form S-4: SBC Communications, Inc. Merger
Form S-8: Nonemployee Director Stock Option Plan
Form S-8: Supplemental Retirement and Savings Plan for Salaried Employees
Form S-8: Supplemental Retirement and Savings Plan for Nonsalaried
Employees
Form S-8: Stock Option and Stock Appreciation Rights Plan
Form S-8: PacTel Corporation Retirement Plan
Form S-8: Stock Incentive Plan
of our reports dated May 17, 1996 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 the accompanying supplemental schedules of
assets held for investment purposes and reportable transactions, filed as part
of Exhibits 99a and 99b, respectively, to the Annual Report on Form 10-K of
Pacific Telesis Group for the year ended December 31, 1995.
San Francisco, California
May 17, 1996
<PAGE>
Exhibit 99a
Form 10-K for 1995
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, 1995
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 . . . . . . . . . . . . . . 1
<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 Benefits with Fund
Information - December 31, 1995 and 1994
Statements of Changes in Net Assets Available for
Benefits with Fund Information For the Years Ended
December 31, 1995, 1994 and 1993
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
1
<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
benefits with fund information of the Pacific Telesis Group Supplemental
Retirement and Savings Plan for Salaried Employees as of December 31, 1995 and
1994, and the related statements of changes in net assets available for
benefits with fund information for each of the three years in the period ended
December 31, 1995. 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 with fund
information of the Pacific Telesis Group Supplemental Retirement and Savings
Plan for Salaried Employees at December 31, 1995 and 1994, and the changes in
net assets available for benefits with fund information for each of the three
years in the period ended December 31, 1995, 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,
1995 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
benefits with fund information and the statement of changes in net assets
available for benefits with fund information 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 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.
San Francisco, California
May 17, 1996
2
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1995
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Equity Income Bond
ASSETS: Fund Fund Fund Fund Fund
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments at fair value, except for contracts with insurance
companies and banks, which are at contract value
Pacific Telesis Group common shares $385,356 - - - -
AirTouch shares - $263,152 - - -
State Street S&P 500 Fund - - $443,957 - -
State Street Long Bond Fund - - - - $38,379
State Street Money Market Fund - - - - -
State Street Balanced Fund - - - - -
Contracts with insurance companies and banks - - - $215,161 -
Short-term investments 4,831 1,643 2,274 14,490 220
---------- ---------- ---------- ----------- ----------
Total Investments 390,187 264,795 446,231 229,651 38,599
Employee contributions receivable 1,308 - 1,625 - 195
Dividends and interest receivable 6,285 4 1 1,262 -
Receivable for investments sold 24 - - - -
---------- ---------- ---------- ----------- ----------
Total Assets 397,804 264,799 447,857 230,913 38,794
---------- ---------- ---------- ----------- ----------
LIABILITIES:
Fund transfers - net 2,884 375 (2,479) 695 (135)
Payable for investments purchased - - 19 - -
Fees payable 67 56 97 74 10
---------- ---------- ---------- ----------- ----------
Total Liabilities 2,951 431 (2,363) 769 (125)
---------- ---------- ---------- ----------- ----------
Net assets available for benefits $394,853 $264,368 $450,220 $230,144 $38,919
========== ========== ========== =========== ==========
3
<PAGE>
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1995
(Dollars in thousands)
<CAPTION>
Money
Market Balanced
ASSETS: Fund Fund Total
---------- ----------- ----------
<S> <C> <C> <C>
Investments at fair value, except for contracts with insurance
companies and banks, which are at contract value
Pacific Telesis Group common shares - - $ 385,356
AirTouch shares - - 263,152
State Street S&P 500 Fund - - 443,957
State Street Long Bond Fund - - 38,379
State Street Money Market Fund $74,605 - 74,605
State Street Balanced Fund - $265,009 265,009
Contracts with insurance companies and banks - - 215,161
Short-term investments 1,272 1,404 26,134
---------- ----------- ----------
Total Investments 75,877 266,413 1,711,753
Employee contributions receivable 486 1,091 4,705
Dividends and interest receivable 1 1 7,554
Receivable for investments sold 366 - 390
---------- ----------- ----------
Total Assets 76,730 267,505 1,724,402
---------- ----------- ----------
LIABILITIES:
Fund transfers - net (310) (1,030) -
Payable for investments purchased 366 5 390
Fees payable 19 64 387
---------- ----------- ----------
Total Liabilities 75 (961) 777
---------- ----------- ----------
Net assets available for benefits $76,655 $268,466 $1,723,625
========== =========== ==========
5
<PAGE>
<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 BENEFITS WITH FUND INFORMATION
December 31, 1994
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Equity Income Bond
ASSETS: Fund Fund Fund Fund Fund
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Investments at fair value
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 contributions receivable 1,566 (77) 1,434 - 173
Dividends and interest receivable 6,364 5 2 645 -
Receivable for investments sold - - - 7,996 -
---------- ---------- ---------- ----------- ----------
Total Assets 344,354 300,054 307,744 238,018 30,431
---------- ---------- ---------- ----------- ----------
LIABILITIES:
Fund transfers - net 644 205 (911) 201 170
Payable for investments purchased - - - - -
Fees payable 68 52 83 45 9
---------- ---------- ---------- ----------- ----------
Total Liabilities 712 257 (828) 246 179
---------- ---------- ---------- ----------- ----------
Net assets available for benefits $343,642 $299,797 $308,572 $237,772 $ 30,252
========== ========== ========== =========== ==========
<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 BENEFITS WITH FUND INFORMATION
December 31, 1994
(Dollars in thousands)
<CAPTION>
Money
Market Balanced
ASSETS: Fund Fund Total
---------- ----------- ----------
<S> <C> <C> <C>
Investments at fair value
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 contributions receivable 449 1,177 4,722
Dividends and interest receivable 291 1 7,308
Receivable for investments sold - - 7,996
---------- ----------- ----------
Total Assets 63,971 204,385 1,488,957
---------- ----------- ----------
LIABILITIES:
Fund transfers - net (551) 242 -
Payable for investments purchased 290 - 290
Fees payable 16 54 327
---------- ----------- ----------
Total Liabilities (245) 296 617
---------- ----------- ----------
Net assets available for benefits $64,216 $204,089 $1,488,340
========== =========== ==========
<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 BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1995
(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 benefits, January 1, 1995 $343,642 $299,797 $308,572 $237,772 $ 30,252
---------- ---------- ---------- ---------- ----------
Employee contributions 20,421 36 21,912 - 2,541
Investment income:
Dividends on Pacific Telesis Group common shares 25,600 - - - -
Interest 148 39 22 15,522 3
Net appreciation (depreciation) of investments (Note 6) 57,927 (9,823) 116,907 - 5,768
Transfers of participants' balances, net (27,436) (6,343) 22,150 (6,430) 1,924
Transfers to/from other plans, net (1,272) (130) 3,316 (494) 419
---------- ---------- ---------- ---------- ----------
Total additions (deductions), net 75,388 (16,221) 164,307 8,598 10,655
Less: Distributions to participants (Note 2) 23,837 18,937 22,482 16,094 1,964
Fees 340 271 177 132 24
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 51,211 (35,429) 141,648 (7,628) 8,667
---------- ---------- ---------- ---------- ----------
Net assets available for benefits, December 31, 1995 $394,853 $264,368 $450,220 $230,144 $ 38,919
========== ========== ========== ========== ==========
<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 BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1995
(Dollars in thousands)
<CAPTION>
Money
Market Balanced
Fund Fund Total
----------- ----------- -----------
<S> <C> <C> <C>
Net assets available for benefits, January 1, 1995 $64,216 $204,089 $1,488,340
----------- ----------- ----------
Employee contributions 6,474 15,688 67,072
Investment income:
Dividends on Pacific Telesis Group common shares - - 25,600
Interest 4,583 14 20,331
Net appreciation (depreciation) of investments (Note 6) - 52,345 223,124
Transfers of participants' balances, net 7,278 8,857 -
Transfers to/from other plans, net 842 2,791 5,472
----------- ----------- -----------
Total additions (deductions), net 19,177 79,695 341,599
Less: Distributions to participants (Note 2) 6,695 15,200 105,209
Fees 43 118 1,105
----------- ----------- -----------
Net increase (decrease) 12,439 64,377 235,285
----------- ----------- -----------
Net assets available for benefits, December 31, 1995 $76,655 $268,466 $1,723,625
=========== =========== ===========
<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 BENEFITS WITH FUND INFORMATION
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 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 24,924 (39,251) 7,389 (10,111) (1,927)
Transfers to/from other plans, net (140,621) 147,355 6,289 1,993 481
----------- ----------- ----------- ----------- -----------
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 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>
11
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1994
(Dollars in thousands)
<CAPTION>
Money
Market Balanced
Fund Fund Total
----------- ----------- -----------
<S> <C> <C> <C>
Net assets available for 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 6,748 12,228 -
Transfers to/from other plans, net 2,530 4,576 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 benefits, December 31, 1994 $64,216 $204,089 $1,488,340
=========== =========== ===========
<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 BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Company Interest
Stock Equity Income Bond
Fund Fund Fund Fund
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net assets available for benefits, January 1, 1993 $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 and to/from other plans, 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 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>
13
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
for the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Money
Market Balanced
Fund Fund Total
----------- ----------- -----------
<S> <C> <C> <C>
Net assets available for benefits, January 1, 1993 $ 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 and to/from other plans, net (923) 12,331 3,608
----------- ----------- -----------
Total additions (deductions), net 8,131 46,525 260,232
Less: Distributions to participants (Note 2) 3,206 6,649 56,061
Fees 52 130 952
----------- ----------- -----------
Net increase (decrease) 4,873 39,746 203,219
----------- ----------- -----------
Net assets available for benefits, December 31, 1993 $ 54,074 $188,212 $1,412,044
=========== =========== ===========
<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.
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 contribution of up to 6% of salary in 1%
increments. If the employee has authorized the maximum basic contribution
of 6%, a supplemental contribution may also be authorized which, when
added to the basic contribution of 6%, results in a total contribution of
not more than 16% of salary. Basic and supplemental contributions may be
made on an after-tax or before-tax basis, as elected by the employee. The
employee may change the rate of employee contributions 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 contributions on a before-tax basis are limited to an annual
maximum, adjusted for inflation ($9,500 for 1996, $9,240 for 1995 and
$9,240 for 1994). Salary eligible for contributions is limited to an
annual maximum, adjusted for inflation ($150,000 for 1996, 1995 and 1994).
Employing Company Matching Allocations - Each participant receives a
"matching" allocation (in Pacific Telesis' stock) equal to 66-2/3% of the
employee's basic contributions. A matching allocation is not made with
respect to supplemental contributions. 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.
Transfers to/from Other Plans - 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.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
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 the ESOP Fund, which is invested in shares of Pacific Telesis Group and
not reflected in this Plan.
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, participants cannot
transfer assets to the ESOP Fund. They can transfer out of the ESOP Fund
after they are at least age 55 with ten years of participation.
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 AirTouch Stock Fund. This new fund was
established as of the record date and consisted initially of the AirTouch
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 AirTouch Stock Fund to any other
investment fund option, except the Interest Income Fund, as of the end of
any month. The once-every-three-months transfer limit described above
will continue to apply to the other investment funds. The AirTouch Stock
Fund was closed to new contributions and investment transfers on April 1,
1994.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
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.
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.
17
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
o The value of before-tax deductions and before-tax Employing Company
matching allocations may be withdrawn, in total or in a partial
withdrawal of at least $300 and a multiple of $50, by employees who
have attained age 59-1/2. However, such withdrawals may not be made
by employees who have not yet attained age 59-1/2, except in the event
of a hardship which is created by the purchase cost of a primary
residence, current year expenses of post-secondary education, eviction
or foreclosure on a principal residence, room and board, 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.
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, installment
payments that are part of a series that extends over 10 or more years,
and distributions required after age 70-1/2, from the Plan to another
qualified plan or to an Individual Retirement Account (IRA) in a
trustee to trustee transfer, in lieu of receiving a direct
distribution.
18
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
Distributions Upon Death - The designated beneficiary or beneficiaries of
participants who die before the effective date of the distribution will
receive the entire amount of the deceased participant's 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 ESOP Fund. Effective March 31, 1994, a
participant or beneficiary may also choose to receive cash or shares from
amounts invested in the AirTouch Stock Fund.
F. Tax Consequences of Participation
Employees may designate their basic and supplemental deductions as before-
tax or after-tax, or as a combination of both. The before-tax basic and
supplemental deductions are intended as contributions under a salary
deferral arrangement qualified under Section 401(k) of the Internal
Revenue Code. Under such an arrangement, the employee's before-tax
deductions are considered a reduction in taxable compensation and are
treated as employer contributions to the Plan (rather than employee
contributions). Before-tax deductions reduce the employee's W-2
compensation for federal income tax purposes and for the income tax
purposes of California and most other states. However, withdrawals of
before-tax contributions are subject to severe restrictions while the
employee is in-service (see "Withdrawals and Distributions").
Employees will not have taxable income as a result of Employing Company
contributions (including the employee's before-tax deductions that are
treated as employer contributions or allocations) or earnings on Plan
assets before the amounts are distributed from the Plan. When a
participant receives a distribution from the Plan, the distribution may be
partially or fully subject to federal and state income taxes depending on
the extent it represents a return of the employee's after-tax
contributions and on whether the participant has elected to receive shares
of appreciated stock.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
In addition to any regular income tax that may be due, a 10% additional
federal tax (and a similar 2-1/2% additional California tax) generally
applies to taxable distributions received prior to age 59-1/2 to the
extent they are not rolled over to another qualified plan or an IRA.
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.
2. Summary of Accounting Policies
------------------------------
Investments are carried at their estimated fair values or contract values
determined as follows:
o Pacific Telesis Group common shares in the Company Stock Fund and the
ESOP Fund, and ATI common shares in the AirTouch 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.
20
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Accounting Policies (Continued)
------------------------------------------
o The Plan's investments in the Interest Income Fund are valued at the
amount of contributed principal plus reinvested interest less
distributions. The Interest Income Fund invests in contracts with
insurance companies, banks or other financial institutions, savings
accounts, certificates of deposit, obligations of the United States
government or other credit worthy organizations, commercial paper,
corporate bond or other debt obligations, as well as other fixed
income investments (subject to any guidelines adopted by the
Corporation) which guarantee by agreement the repayment of principal
plus interest. The Plan has adopted the American Institute of
Certified Public Accountants (AICPA) Statement of Position (SOP) 94-4,
Reporting of Investment Contracts held by Health and Welfare Benefit
Plans and Defined-Contribution Pension Plans for the year ended
December 31, 1995. Under SOP 94-4, the Plan should report fully
benefit-responsive investment contracts at contract value, which may
or may not be equal to fair value and all other investment contracts
at fair value. The Plan investments in the Interest Income Fund were
carried at fair value at December 31, 1994 and contract value at
December 31, 1995. There was no impact to the change in accounting
for the Interest Income Fund because at December 31, 1995 and 1994,
contract value and fair value of such contracts were equivalent.
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.
In accordance with Generally Accepted Accounting Principles, 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 excluded from net
assets available for benefits with fund information.
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Accounting Policies (Continued)
------------------------------------------
The Department of Labor requires these amounts to be reported as a
liability on the Form 5500. The following reconciles net assets available
for benefits between these financial statements and the Form 5500 as of
December 31 (dollars in thousands):
1995 1994
------------ -------------
Net assets available for plan
benefits per financial statements $1,723,625 $1,488,340
Benefits due for participant
withdrawal/distribution (23,782) (19,503)
------------ ------------
Net assets available for Plan
benefits per Form 5500 $1,699,843 $1,468,837
============ ============
Similarly, the 1995 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):
1995
--------------
Distributions to participants per
financial statements $105,209
Benefits due:
Beginning of year (19,503)
End of year 23,782
--------------
Distributions to participants per Form 5500 $109,488
==============
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. Thereafter, the employer matching contributions are made
through the LESOP.
22
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
3. Participant Accounts (Continued)
-------------------------------
An employee's interest in the accounts is represented by units of
participation ("Units") in each investment fund in which the employee
participates. Monthly, a participant's account is credited with Units in
each fund to which the participant's payroll deductions have been
directed. The number of Units credited is based upon each respective
fund's current Unit value which is determined as of the end of each month.
A fund's Unit value is based upon the fair value of the underlying assets
and will reflect any unrealized appreciation or depreciation of the fund's
assets. The determination of the end of month 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, 1995 and 1994 were as
follows:
December 31, 1995
-----------------
Number of Units
(in thousands) Value per Unit
---------------- --------------
Company Stock Fund 86,138 $ 4.5161
AirTouch Stock Fund 79,359 $ 3.2864
Equity Fund 30,798 $14.4322
Interest Income Fund 47,850 $ 4.7531
Bond Fund 29,362 $ 1.3099
Money Market Fund 63,225 $ 1.1801
Balanced Fund 178,083 $ 1.4883
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
23
<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,
1995 and 1994 by each investment direction were as follows:
December 31,
-----------------
1995 1994
-------- --------
Entirely in the Company Stock Fund 1,959 2,439
Entirely in the Equity Fund 1,076 947
Entirely in the Bond Fund 20 25
Entirely in the Money Market Fund 440 496
Entirely in the Balanced Fund 568 627
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 885 984
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 556 630
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 30 44
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 384 467
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 209 209
10% increments totalling 100% in the Equity Fund
and the Bond Fund 112 104
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,542 1,371
10% increments totalling 100% in the Money Market
and the Bond Fund 32 31
10% increments totalling 100% in the Money Market
and the Balanced Fund 95 94
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 68 87
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Money Market Fund 290 332
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 60 64
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,038 1,097
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 16 19
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 94 104
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 50 62
24
<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,
-----------------
1995 1994
-------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 46 38
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 158 139
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 390 366
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 43 48
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 31 20
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 185 165
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 257 265
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 21 24
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 219 149
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 347 301
-------- --------
Total Employees Contributing 11,221 11,748
======== ========
5. Tax Status
----------
The Internal Revenue Service issued a determination letter on July 18,
1995, stating that the Plan, as amended effective April 1, 1994, 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. There have been no amendments to the
Plan since April 1, 1994.
25
<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, 1995, 1994 and 1993, the net appreciation (depreciation) of investments,
including both net realized and unrealized amounts, was as follows (Dollars in thousands):
<CAPTION>
AirTouch
Stock Company Equity
Fund Stock Fund Fund
----------- ----------- -----------
<S> <C> <C> <C>
1995
----
Common Stock $ (9,823) $ 57,927 -
Bank Common and Commingled Trust Funds - - $116,907
Insurance Contracts - - -
----------- ----------- -----------
Net Appreciation (Depreciation) $ (9,823) $ 57,927 $116,907
=========== =========== ===========
1994
----
Common Stock $176,142 $(145,171) $ -
Bank Common and Commingled Trust Funds - - 4,355
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
=========== =========== ===========
</TABLE>
26
<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, 1995, 1994 and 1993, 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
Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995
----
Common Stock $ - $ - $ - $ $ 48,104
Bank Common and Commingled Trust Funds - 5,768 - 52,345 175,020
Insurance Contracts - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation (depreciation) $ - $ 5,768 $ - $ 52,345 $ 223,124
=========== =========== =========== =========== ==========
1994
----
Common Stock $ - $ - $ - $ - $ 30,971
Bank Common and Commingled Trust Funds - (918) - 2,371 5,808
Insurance Contracts - - - - -
----------- ----------- ----------- ----------- ----------
Net Appreciation (depreciation) $ - $ (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
=========== =========== =========== =========== ==========
</TABLE>
27
<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
----------------
On April 1, 1996, the Corporation and SBC Communications, Inc. announced
a definitive agreement under which the Corporation will become a wholly-
owned subsidiary of SBC Communications Inc. The merger agreement must
be approved by the shareholders of the Corporation and SBC. In addition,
the merger must be approved by several governmental agencies. Under the
terms of the agreement, on the effective date of the merger, each share
of common stock of the Corporation will be converted into the right to
receive, and become exchangeable for, 0.733 of share of SBC common stock,
subject to adjustment in the event of certain contingencies. The shares
of stock of the Corporation held under the Plan in the Company Stock Fund
and the ESOP Fund will be subject to these and other terms of the
agreement.
28
<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, 1995
----------------------------------------
Percent Number of
of Fund Shares or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- --------- ---------- -------- ----------
Pacific Telesis Group common
shares* 97.6% 11,503 shs $254,325 $385,356
Bankers Trust Pyramid
Discretionary Cash Fund 1.2% $4,831 4,831 4,831
--------- --------- ----------
Total Company Stock Fund 98.8% $259,156 $390,187
========= --------- ----------
AIRTOUCH STOCK FUND
(Dollars and units in thousands) December 31, 1995
----------------------------------------
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% 9,356 shs $132,869 $263,152
Bankers Trust Pyramid
Discretionary Cash Fund 0.6% $1,643 1,643 1,643
-------- --------- ---------
Total AirTouch Stock Fund 100.1% $134,512 $264,795
======== --------- ---------
EQUITY FUND
(Dollars and units in thousands) December 31, 1995
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- ---------- -------- ----------
State Street S&P 500 Fund* 98.6% 4,573 unt$ 286,514 $ 443,957
Bankers Trust Pyramid
Discretionary Cash Fund 0.5% $2,274 2,274 2,274
-------- -------- ----------
Total Equity Fund 99.1% $288,788 $446,231
======== -------- ----------
(* See footnote on page 35.)
29
<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, 1995
----------------------------------------
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 98.6% 2,899 unt $30,581 $38,379
Bankers Trust Pyramid
Discretionary Cash Fund 0.6% $220 220 220
-------- -------- ----------
Total Bond Fund 99.2% $30,801 $ 38,599
======== -------- ----------
MONEY MARKET FUND
(Dollars and units in thousands) December 31, 1995
----------------------------------------
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 97.3% 74,607 unt $ 74,607 $74,605
Bankers Trust Pyramid
Discretionary Cash Fund 0.2% $1,272 1,272 1,272
-------- -------- ----------
Total Money Market Fund 97.5 % $75,879 $75,877
======== -------- ----------
BALANCED FUND
(Dollars and units in thousands) December 31, 1995
----------------------------------------
Percent Number of
of Fund Units or
Net Principal Fair
Name of Issuer and Title of Issue Assets Amount Cost Value
- --------------------------------- -------- ---------- -------- ----------
State Street Balanced Fund* 98.7% 17,693 unt $189,557 $265,009
Bankers Trust Pyramid
Discretionary Cash Fund 0.5% $1,404 1,404 1,404
-------- -------- ----------
Total Balanced Fund 99.2% $190,961 $266,413
======== -------- ----------
(* See footnote on page 35.)
30
<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, 1995
(Dollars and shares in thousands) ---------------------------------------
Percent of
Name of Issuer, Maturity Fund Net Principal Contract
Date and Rate of Interest Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Contracts with insurance companies and banks:
John Hancock (12/31/96) 6.5% 4.9% $ 11,486 $ 11,486 $ 11,486
Metropolitan Life Insurance
Company (12/31/96) 7.8% 2.6% 6,003 6,003 6,003
The Mutual Benefit Life
Insurance Company ** 0.5% 1,299 1,299 1,299
Connecticut General Life Insurance
Company (accrued income)
(12/29/95) 4.9% 0% 37 37 37
Life Insurance of Georgia 3.7% 8,438 8,438 8,438
(12/31/97) 6.9%
Provident National Assurance 5.8% 13,311 13,311 13,311
Company (12/31/97) 6.3%
AETNA (12/31/98) 5.7% 6.3% 14,398 14,398 14,398
Lotsoff Capital Management
(06/30/00) 6.5% 10.0% 22,838 22,838 22,838
Allstate Insurance Company
(06/30/96) 9.2% 13.9% 32,036 32,036 32,036
Allstate Insurance Company
(07/05/00) 6.8% 4.3% 9,820 9,820 9,820
CitiBank (12/31/98) 7.2% 4.5% 10,369 10,369 10,369
CitiBank (12/31/97) 5.0% 4.4% 10,031 10,031 10,031
Prudential Asset Management
Group (12/31/96) 8.0% 1.3% 3,089 3,089 3,089
American International Life
(06/30/97) 6.2% 2.2% 5,059 5,059 5,059
Prudential Asset Management
Group (12/31/98) 5.3% 5.2% 12,008 12,008 12,008
Prudential Asset Management
Group (06/30/99) 7.0% 6.3% 14,449 14,449 14,449
Prudential Asset Management
Group (06/30/99) 7.0% 4.7% 10,733 10,733 10,733
Provident National Assurance
Company (01/02/98) 6.6% 3.3% 7,670 7,670 7,670
CNA Insurance Company
(06/30/99) 6.8% 9.6% 22,087 22,087 22,087
-------- ---------- ---------- ---------
Total contracts with insurance
companies and banks 93.5% 215,161 215,161 215,161
-------- ---------- ---------- ---------
31
<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, 1995
(Dollars and shares in thousands) ---------------------------------------
Percent of
Name of Issuer, Maturity Fund Net Principal Contract
Date and Rate of Interest Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Bankers Trust Pyramid
Discretionary Cash Fund 6.3% 14,490 14,490 14,490
---------------------------- ---------
Total Interest Income Fund 99.8% 229,651 229,651 229,651
======== ---------- ---------
GRAND TOTAL 99.3%
$1,209,749 $1,711,753
======== ========== ==========
(** See footnote on page 35).
- -----------------
Percentages represent the item's fair value as a percent of the applicable
fund's Net Assets Available for Benefits at December 31, 1995.
* Investment represents 5% or more of the total Net Assets Available for
Plan Benefits at December 31, 1995.
** 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.
32
<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, 1995
(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 464 N/A $257,404 $257,404 N/A -
Pacific Telesis Group Pacific Telesis Group
common shares common shares 42 N/A $64,755 $47,459 N/A $17,296
Bankers Trust Pyramid Short-term
Discretionary Cash Fund Investments 432 $257,543 N/A N/A $257,643 N/A
Pacific Telesis Group Pacific Telesis Group
common shares common shares 67 $67,399 N/A N/A $67,399 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 benefits at the
beginning of the Plan year, January 1, 1995.
</TABLE>
33
<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
benefits of the Pacific Telesis Group Supplemental Retirement and Savings
Plan for Salaried and Nonsalaried Employees-Leveraged ESOP as of December
31, 1995 and 1994, and the related statement of changes in net assets
available for 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 benefits of the
Pacific Telesis Group Supplemental Retirement and Savings Plan for Salaried
and Nonsalaried Employees-Leveraged ESOP as of December 31, 1995 and 1994,
and the changes in net assets available for 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, 1995, 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.
San Francisco, California
May 17, 1996
34
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1995 and 1994
(Dollars in thousands)
ASSETS
1995 1994
---------- ----------
Investment - at fair value
Pacific Telesis Group Common Shares, at
fair value, Cost $604,239 and $672,245
for 1995 and 1994, respectively (Note 3) $663,567 $590,806
Employer Receivable 70,530 45,729
Interest Receivable 165 -
Dividend Receivable 10,795 11,298
Short-Term Investments 33,692 41
---------- ----------
Total Assets 778,749 647,874
---------- ----------
LIABILITIES
Benefits Payable (Note 2)
Interest Payable 21,052 10,264
Note Payable (Note 7) 301,191 347,954
---------- -----------
Total Liabilities 322,243 358,218
---------- -----------
Net Assets Available For
Benefits $456,506 $ 289,656
========== ===========
NET ASSETS AVAILABLE FOR BENEFITS
Net Assets Allocated to Participants $382,284 265,569
Net Assets Available for
Future Allocations 74,222 24,087
---------- ----------
Net Assets Available
For Benefits $456,506 $ 289,656
========== ==========
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For The Years Ended December 31, 1995 and 1994
(Dollars in thousands)
1995 1994
--------- ---------
Net Assets Available for Benefits,
January 1, $289,656 352,573
--------- ---------
Additions to Net Assets Attributed to:
Investment Income
Dividends on Pacific Telesis Group
Common Shares 43,720 39,297
Interest Income 941 618
Net Appreciation (Depreciation) of
Investments (Note 4) 99,170 (48,342)
Employer Contributions for Loan Repayment 70,530 57,695
--------- ---------
Total Additions 214,361 49,268
--------- ---------
Deductions from Net Assets Attributed to:
Distributions to Participants 26,459 89,278
Interest Expense 21,052 22,907
--------- ---------
Total Deductions 47,511 112,185
--------- ---------
Net Increase 166,850 (62,917)
--------- ---------
Net Assets Available for Benefits,
December 31 $456,506 $289,656
========= =========
The accompanying notes are an integral part of the financial statements.
36
<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, PacTel Corporation separated from Pacific
Telesis Group with PacTel Corporation renamed AirTouch Communications,
Inc. (ATI). 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
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 participants'
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 pay or
salary for such month.
37
<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 1995 plan
year was $100,793,829. 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 AirTouch 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.
38
<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 to the extent they are not rolled over to another qualified plan or
an IRA. 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.
In accordance with Generally Accepted Accounting Principles, 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 excluded from net
assets available for benefits.
39
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL AND RETIREMENT SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Accounting Policies (Continued)
------------------------------------------
The Department of Labor requires these amounts to be reported as a
liability on the Form 5500. The following reconciles net assets
available for benefits between these financial statements and the Form
5500 as of December 31 (dollars in thousands):
1995 1994
------------ ------------
Net assets available for plan
benefits per financial statements $456,506 $289,656
Benefits due for participant
withdrawal/distribution (7,682) (6,100)
------------ ------------
Net assets available for Plan
benefits per Form 5500 $448,824 $283,556
============ ============
Similarly, the 1995 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):
1995
------------
Distributions to participants per
financial statements $26,459
Benefits due:
Beginning of year (6,100)
End of year 7,682
------------
Distributions to participants per Form 5500 $28,041
============
40
<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, 1995 and 1994, total investment, including shares in the
Savings Stock Match account and shares held in the suspense account, is
as follows (Dollars in thousands):
Fair
1995 Units Cost Value
---- ---------- -------- --------
Savings Stock Match Account 11,228,756 $339,247 $376,163
Suspense Account 8,579,204 264,992 287,403
----------- ---------- ----------
Total 19,807,960 $604,239 $663,566
=========== =========== ==========
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
=========== ======== ========
4. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1995 and 1994 the net appreciation
(depreciation) of investments, including both net realized and unrealized
amounts, was as follows (Dollars in thousands):
1995 1994
---------- ----------
Common Stock $99,170 $(48,342)
========== ==========
5. Tax Status
----------
The Internal Revenue Service issued an initial determination letter for
the LESOP on July 18, 1995, stating that the Plan as amended effective as
of April 1, 1994, 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.
There has been no amendments since April 1, 1994.
41
<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 in proportion to their pay or salary in the year the
termination occurs. 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
$10,263,000 and $18,695,000 in interest and $46,763,000 and $96,151,000
in principal on the outstanding loan balance during the year ended
December 31, 1995 and 1994, 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.
42
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR SALARIED AND NONSALARIED EMPLOYEES-LEVERAGED ESOP
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
9. Subsequent Event
----------------
On April 1, 1996, the Corporation and SBC Communications, Inc. announced
a definitive agreement under which the Corporation will become a wholly-
owned subsidiary of SBC Communications Inc. The merger agreement must
be approved by the shareholders of the Corporation and SBC. In addition,
the merger must be approved by several governmental agencies. Under the
terms of the agreement, on the effective date of the merger, each share
of common stock of the Corporation will be converted into the right to
receive, and become exchangeable for, 0.733 of share of SBC common stock,
subject to adjustment in the event of certain contingencies. The shares
of stock of the Corporation held under the Plan in the Company Stock Fund
and the ESOP Fund will be subject to these and other terms of the
agreement.
43
<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, 1995
(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 21 N/A $37,897 $37,897 N/A N/A
Bankers Trust Pyramid
Directed Account Short-term
Cash Fund Investments 48 $71,549 N/A N/A $71,549 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 benefits at the beginning
of the Plan year, January 1, 1995.
</TABLE>
44
<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 NON-SALARIED EMPLOYEES
By Savings Plans Committee
By: /s/R. P. McGahan
-------------------------------
R. P. McGahan
Member of the Committee
Dated: June 26, 1996
45
<PAGE>
Exhibit 99b
Form 10-K for 1995
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, 1995
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 . . . . . . . . . . . . . . . 1
<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 Benefits with Fund
Information - December 31, 1995 and 1994
Statements of Changes in Net Assets Available for Benefits
with Fund Information For the Years Ended December 31,
1995, 1994 and 1993
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
1
<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
benefits with fund information of the Pacific Telesis Group Supplemental
Retirement and Savings Plan for Nonsalaried Employees as of December 31,
1995 and 1994, and the related statements of changes in net assets available
for benefits with fund information for each of the three years in the period
ended December 31, 1995. 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 with fund
information of the Pacific Telesis Group Supplemental Retirement and Savings
Plan for Nonsalaried Employees at December 31, 1995 and 1994, and the
changes in net assets available for benefits with fund information for each
of the three years in the period ended December 31, 1995, 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,
1995 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
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 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.
San Francisco, California
May 17, 1996
2
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1995
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Income Equity
ASSETS: Fund Fund Fund Fund
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value, except for contracts with insurance
companies and banks, which are at contract value
Pacific Telesis Group common shares $460,264 - - -
AirTouch common shares - $268,833 - -
State Street S&P 500 Fund - - - 104,551
State Street Long Bond Fund - - - -
State Street Money Market Fund - - - -
State Street Balanced Fund - - - -
Contracts with insurance companies and banks - - $134,907 -
Short-term investments 9,916 3,936 8,412 2,302
----------- ----------- ---------- ----------
Total Investments 470,180 272,769 143,319 106,853
Employee contributions receivable 211 - - 124
Dividends and interest receivable 7,507 5 789 2
Receivable for investments sold - - - -
----------- ----------- ---------- ----------
Total Assets 477,898 272,774 144,108 106,979
----------- ----------- ---------- ----------
LIABILITIES:
Fund transfers - net 3,556 477 255 (2,348)
Payable for investments purchased - 518 - -
Fees payable 149 153 94 27
----------- ----------- ---------- ----------
Total Liabilities 3,705 1,148 349 (2,321)
----------- ----------- ---------- ----------
Net assets available for benefits $474,193 $271,626 $143,759 $109,300
=========== =========== ========== ==========
3
<PAGE>
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NONSALARIED EMPLOYEES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1995
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced
ASSETS: Fund Fund Fund Total
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value, except for contracts with insurance
companies and banks, which are at contract value
Pacific Telesis Group common shares $ - $ - $ - $ 460,264
AirTouch common shares - - - 268,833
State Street S&P 500 Fund - - - 104,551
State Street Long Bond Fund 20,587 - - 20,587
State Street Money Market Fund - 43,739 - 43,739
State Street Balanced Fund - - 97,438 97,438
Contracts with insurance companies and banks - - - 134,907
Short-term investments 570 1,779 2,158 29,073
----------- ---------- ---------- ----------
Total Investments 21,157 45,518 99,596 1,159,392
Employee contributions receivable (Forfeiture credits) 21 91 87 534
Dividends and interest receivable - 1 2 8,306
Receivable for investments sold - 214 - 214
----------- ---------- ---------- ----------
Total Assets 21,178 45,824 99,685 1,168,446
----------- ---------- ---------- ----------
LIABILITIES:
Fund transfers - net (1) (551) (1,388) -
Payable for investments purchased - 214 - 732
Fees payable 7 14 33 477
----------- ---------- ---------- ----------
Total Liabilities 6 (323) (1,355) 1,209
----------- ---------- ---------- ----------
Net assets available for benefits $21,172 $46,147 $101,040 $1,167,237
=========== ========== ========== ==========
5
<PAGE>
<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 BENEFITS WITH FUND INFORMATION
December 31, 1994
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Income Equity
ASSETS: Fund Fund Fund Fund
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value
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 191 (43) - 79
Dividends and interest receivable 7,545 9 814 1
Receivable for investments sold - - - -
----------- ----------- ---------- ----------
Total Assets 406,378 320,690 154,082 58,889
----------- ----------- ---------- ----------
LIABILITIES:
Fund transfers - net 605 75 42 (298)
Payable for investments purchased - - - -
Fees payable 153 112 59 24
----------- ----------- ---------- ----------
Total Liabilities 758 187 101 (274)
----------- ----------- ---------- ----------
Net assets available for benefits $405,620 $320,503 $153,981 $59,163
=========== =========== ========== ==========
<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 BENEFITS WITH FUND INFORMATION
December 31, 1994
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced
ASSETS: Fund Fund Fund Total
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investments at fair value
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) 21 346 (28) 566
Dividends and interest receivable - 148 1 8,518
Receivable for investments sold - - - -
----------- ---------- ---------- ----------
Total Assets 15,021 33,863 71,477 1,060,400
----------- ---------- ---------- ----------
LIABILITIES:
Fund transfers - net (4) (226) (194) -
Payable for investments purchased - 147 - 147
Fees payable 7 12 30 397
----------- ---------- ---------- ----------
Total Liabilities 3 (67) (164) 544
----------- ---------- ---------- ----------
Net assets available for benefits $15,018 $33,930 $71,641 $1,059,856
=========== ========== ========== ==========
<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 BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1995
(Dollars in thousands)
<CAPTION>
Company AirTouch Interest
Stock Stock Income Equity
Fund Fund Fund Fund
----------- ----------- ------------ ---------
<S> <C> <C> <C> <C>
Net assets available for benefits, January 1, 1995 $405,620 $320,503 $153,981 $ 59,163
----------- ----------- ---------- ---------
Employee contributions 42,834 2 - 10,864
Investment income:
Dividends on Pacific Telesis Group common shares 30,187 - - -
Interest 199 39 9,773 14
Net appreciation (depreciation) of investments (Note 6) 68,635 (10,420) - 23,650
Transfers of participants' balances, net (24,025) (4,969) (2,686) 19,766
Transfers to/from other plans, net (1,645) (360) (212) 2,966
----------- ----------- ---------- ---------
Total additions (deductions), net 116,185 (15,708) 6,875 57,260
Less: Distributions to participants (Note 2) 46,934 32,682 16,926 7,036
Fees 678 487 171 87
----------- ---------- --------- ---------
Net increase (decrease) 68,573 (48,877) (10,222) 50,137
----------- ---------- --------- ---------
Net assets available for benefits, December 31, 1995 $474,193 $271,626 $143,759 $109,300
=========== =========== ========== =========
<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 BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1995
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced
Fund Fund Fund Total
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net assets available for benefits, January 1, 1995 $ 15,018 $33,930 $ 71,641 $1,059,856
----------- ----------- ----------- ----------
Employee contributions $ 3,188 13,259 11,151 81,298
Investment income:
Dividends on Pacific Telesis Group common shares - - - 30,187
Interest 3 2,529 12 12,569
Net appreciation (depreciation) of investments (Note 6) 2,929 - 18,421 103,215
Transfers of participants' balances, net 1,496 3,362 7,056 -
Transfers to/from other plans, net 286 988 2,248 4,271
----------- ----------- ---------- ---------
Total additions (deductions), net 7,902 20,138 38,888 231,540
Less: Distributions to participants (Note 2) 1,722 7,869 9,397 122,566
Fees 26 52 92 1,593
----------- ----------- ---------- ---------
Net increase (decrease) 6,154 12,217 29,399 107,381
----------- ----------- ---------- ---------
Net assets available for benefits, December 31, 1995 $21,172 $46,147 $101,040 $1,167,237
=========== ========== ========= =========
<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 BENEFITS WITH FUND INFORMATION
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 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 38,329 (47,353) (5,314) 5,738
Transfers to/from other plans, net (154,020) 166,249 1,191 1,519
----------- ----------- ---------- ---------
Total additions (deductions), net (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 (decrease) (238,554) 320,503 (7,944) 13,632
----------- ----------- ---------- ---------
Net assets available for 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>
11
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1994
(Dollars in thousands)
<CAPTION>
Money
Bond Market Balanced
Fund Fund Fund Total
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net assets available for benefits, $14,725 $19,298 $56,159 $941,812
January 1, 1994
----------- ----------- ---------- ---------
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 (1,898) 3,061 7,437 -
Transfers to/from other plans, net 334 1,129 1,885 18,287
----------- ---------- --------- ---------
Total additions (deductions), net 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 (decrease) 293 14,632 15,482 118,044
----------- ---------- --------- ---------
Net assets available for 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>
12
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1993
(Dollars in thousands)
<CAPTION>
Pacific Diversified
Telesis Telephone Guaranteed CWA/
Group Portfolio Interest IBEW Equity
Shares Fund Fund Fund Funds Fund
----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net assets available for benefits, January 1, 1993 $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 to/from other plans, net 24,344 (61,486) (48,963) (1,125) 34,668
----------- ----------- ---------- --------- ---------
Total additions (deductions), net 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 (decrease) 157,253 (64,215) (53,281) (1,125) 45,531
----------- ----------- ---------- --------- ---------
Net assets available for benefits,
December 31, 1993 $644,174 $ - $161,929 $ - $45,531
=========== =========== ========== ========= =========
<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 NONSALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
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 benefits, January 1, 1993 $ - $ - $ - $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 and to/from other plans, net 10,183 6,101 44,184 7,906
----------- ---------- --------- ---------
Total additions (deductions), net 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 (decrease) 14,725 19,298 56,159 174,345
----------- ---------- --------- ---------
Net assets available for 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>
14
<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.
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
contributions of up to 6% of pay may be contributed in 1% increments. If
the employee has authorized the maximum basic contribution, a
supplemental contribution may also be authorized which, when added to the
basic contribution, results in a total contribution of not more than 16%
of the employee's pay. Basic and supplemental contributions may be made
on an after-tax or before-tax basis, as elected by the employee. The
employee may change the rate of employee contributions 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 contributions on a before-tax basis are limited to an annual
maximum, adjusted for inflation ($9,500 for 1996, $9,240 for 1995 and
$8,994 for 1994). Pay eligible for deductions is limited to an annual
maximum, adjusted for inflation ($250,000 for 1996, $245,000 for 1995 and
$242,280 for 1994).
Employing Company Matching allocations - Each participant receives a
matching allocation equal to 66-2/3% of the employee's basic
contributions. 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. A matching allocation is not made with respect to
supplemental deductions.
Transfers to/from Other Plans - 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 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.
15
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
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 the ESOP Fund, which is invested in shares of Pacific Telesis Group.
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,
participants cannot transfer assets to the ESOP Fund. They can transfer
assets out of the ESOP Fund after they are at least age 55 with 10 years
of participation.
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.
16
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
Effective March 31, 1994, the Corporation has amended the Plan to add a
new investment fund, the AirTouch 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 Air Touch Stock Fund to any
other investment fund option, except the Interest Income Fund, as of the
end of any month. The once-every-three-months transfer limit described
above will continue to apply to the other investment funds. The AirTouch
Stock Fund was closed to new contributions and investment transfers on
April 1, 1994.
D. Vesting and Forfeitures
Employee deduction accounts are always fully vested and nonforfeitable.
Employing Company matching accounts (the Savings Plan's matching account
and the LESOP's Savings Match Stock account) are fully vested after a
participant either completes three years of service or reaches age 65
while employed. Employing Company matching accounts are also fully
vested upon termination of employment due to retirement, disability,
death, termination under certain severance pay plans or termination due
to layoff.
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.
17
<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, room and board, 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.
18
<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, installment
payments that are part of a series that extends over 10 or more years,
and distributions required after age 70-1/2, from the Plan to another
qualified plan or to an Individual Retirement Account (IRA), in a
trustee to trustee transfer, in lieu of receiving a direct
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 the decreased participant's 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.
19
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
1. Plan Description (Continued)
----------------------------
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 ESOP Fund. Effective March 31, 1994, a
participant or beneficiary may also choose to receive cash or shares from
amounts invested in the AirTouch Stock Fund.
F. Tax Consequences of Participation
Employees may designate their basic and supplemental deductions as
before-tax or after-tax, or as a combination of both. The before-tax
basic and supplemental deductions are intended as contributions under a
salary deferral arrangement qualified under Section 401(k) of the
Internal Revenue Code. Under such an arrangement, the employee's before-
tax deductions are considered a reduction in taxable compensation and are
treated as employer contributions to the Plan (rather than employee
contributions). Before-tax deductions reduce the employee's W-2
compensation for federal income tax purposes and for the income tax
purposes of California and most other states. However, withdrawals of
before-tax contributions are subject to severe restrictions while the
employee is in-service (see "Withdrawals and Distributions").
Employees will not have taxable income as a result of Employing Company
contributions (including the employee's before-tax deductions that are
treated as employer contributions or allocations) or earnings on Plan
assets before the amounts are distributed from the Plan. When a
distribution is received from the Plan other than in a direct rollover
transfer, it may be partially or fully subject to federal and state
income taxes depending on the extent it represents a return of the
employee's after-tax contributions and on whether the participant elects
to receive shares of appreciated stock. In addition to any regular
income tax that may be due, a 10% additional federal tax (and a similar
2-1/2% additional California tax) generally applies to the taxable amount
of distributions received prior to age 59-1/2 to the extent they are not
rolled over to another qualified plan or an IRA.
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 NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Accounting Policies
------------------------------
Investments are carried at their estimated fair values or contract values
determined as follows:
o Pacific Telesis Group common shares in the Company Stock Fund and the
ESOP Fund, and ATI common shares in the AirTouch 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. The Plan has adopted the American Institute of
Certified Public Accountants (AICPA) Statement of Position (SOP) 94-4,
Reporting of Investment Contracts Held by Health and Welfare Benefit
Plans and Defined-Contribution Pension Plans for the year ended
December 31, 1995. Under SOP 94-4, the Plan should report fully
benefit-responsive investment contracts at contract value, which may
or may not be equal to fair value and all other investment contracts
at fair value. The Plan investments in the Interest Income Fund were
carried at fair value at December 31, 1994 and contract value at
December 31, 1995. There was no impact to the change in accounting
for the Interest Income Fund because at December 31, 1995 and 1994,
contract value and fair value of such contracts were equivalent.
21
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
2. Summary of Accounting Policies (Continued)
------------------------------
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.
In accordance with Generally Accepted Accounting Principles, 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 excluded from net
assets available for benefits with fund information.
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):
1995 1994
----------- -----------
Net assets available for plan
benefits per financial statements $1,167,237 $1,059,856
Benefits due for participant
withdrawal/distribution (34,719) (36,555)
----------- -----------
Net assets available for Plan
benefits per Form 5500 $1,132,518 $1,023,301
=========== ===========
Similarly, the 1995 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):
1995
-----------
Distributions to participants per
financial statements $122,566
Benefits due:
Beginning of year (36,555)
End of year 34,719
-----------
Distributions to participants per Form 5500 $120,730
===========
22
<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.
Thereafter, the employer matching contributions are made through the
LESOP.
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 the end of month
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, 1995 and 1994 were as
follows:
December 31, 1995
-----------------
Number of Units
(in thousands) Value per Unit
--------------- --------------
Company Stock Fund 100,687 $4.5707
AirTouch Stock Fund 79,236 $3.3284
Equity Fund 69,579 $1.5232
Interest Income Fund 28,332 $4.9375
Bond Fund 16,404 $1.2531
Money Market Fund 38,667 $1.1424
Balanced Fund 68,634 $1.4276
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
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, 1995 and 1994 by each investment direction were as follows:
December 31,
-----------------
1995 1994
------- -------
Entirely in the Company Stock Fund 8,385 10,375
Entirely in the Equity Fund 686 404
Entirely in the Bond Fund 68 79
Entirely in the Money Market Fund 2,615 2,975
Entirely in the Balanced Fund 768 775
10% increments totalling 100% in the Company Stock
Fund and the Equity Fund 1,039 1,001
10% increments totalling 100% in the Company Stock
Fund and the Money Market Fund 3,870 4,499
10% increments totalling 100% in the Company Stock
Fund and the Bond Fund 186 237
10% increments totalling 100% in the Company Stock
Fund and the Balanced Fund 1,010 1,229
10% increments totalling 100% in the Equity Fund
and the Money Market Fund 109 71
10% increments totalling 100% in the Equity Fund
and the Bond Fund 205 218
10% increments totalling 100% in the Equity Fund
and the Balanced Fund 1,567 1,076
10% increments totalling 100% in the Money Market
and the Bond Fund 54 51
10% increments totalling 100% in the Money Market
and the Balanced Fund 142 151
10% increments totalling 100% in the Bond Fund
and the Balanced Fund 97 118
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and Money Market Fund 204 193
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Bond Fund 296 321
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund and the Balanced Fund 1,809 1,719
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Bond Fund 117 111
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund and the Balanced Fund 214 243
10% increments totalling 100% in the Company Stock
Fund, the Bond Fund and the Balanced Fund 175 213
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,
-----------------
1995 1994
------- -------
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Bond Fund 88 79
10% increments totalling 100% in the Equity Fund,
the Money Market Fund and the Balanced Fund 221 164
10% increments totalling 100% in the Equity Fund,
the Bond Fund and the Balanced Fund 579 438
10% increments totalling 100% in the Money Market
Fund, the Bond Fund and the Balanced Fund 65 69
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Bond Fund 129 117
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund
and the Balanced Fund 320 273
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Bond Fund and the
Balanced Fund 738 755
10% increments totalling 100% in the Company Stock
Fund, the Money Market Fund, the Bond Fund and
the Balanced Fund 59 65
10% increments totalling 100% in the Equity Fund,
the Money Market Fund, the Bond Fund and the
Balanced Fund 332 230
10% increments totalling 100% in the Company Stock
Fund, the Equity Fund, the Money Market Fund,
the Bond Fund and the Balanced Fund 1,136 930
------- -------
Total Employees Contributing 27,283 29,179
======= =======
5. Tax Status
----------
The Internal Revenue Service issued a determination letter on May 16,
1996, stating that the Plan, as amended effective April 1, 1994, 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. There have been no amendments
since April 1, 1994.
25
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1995, 1994 and 1993, 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>
1995
----
Common Stock $ 68,635 $(10,420) $ - $ - $ -
Bank Common and Commingled Trust Funds - - - - -
Insurance Contracts - - - - -
----------- ---------- ---------- -------- --------
Net Appreciation (Depreciation) $ 68,635 $(10,420) $ - $ - $ -
=========== ========== ========== ======== ========
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
=========== ========= ========== ======== ========
</TABLE>
26
<PAGE>
<TABLE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
6. Net Appreciation (Depreciation) of Investments
----------------------------------------------
During the years ended December 31, 1995, 1994 and 1993, 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
Fund Fund Fund Fund Total
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1995
----
Common Stock $ - $ - $ - $ - $58,215
Bank Common and Commingled Trust Funds 23,650 2,929 - 18,421 45,000
Insurance Contracts - - - - -
----------- ---------- ---------- ---------- ----------
Net Appreciation (Depreciation) $23,650 $ 2,929 $ - $18,421 $103,215
=========== ========== ========== ========== ==========
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
=========== ========== ========== ========== ==========
</TABLE>
27
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
7. Plan Termination
----------------
The Corporation, by action of the Board of Directors, may at any time
terminate the making of deductions from pay of all participating
employees and of contributions by the Employing Company in connection
with the Plan. If at any time the 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
----------------
On April 1, 1996, the Corporation and SBC Communications, Inc.
announced a definitive agreement under which the Corporation will
become a wholly-owned subsidiary of SBC Communications Inc. The merger
agreement must be approved by the shareholders of the Corporation and
SBC. In addition, the merger must be approved by several governmental
agencies. Under the terms of the agreement, on the effective date of
the merger, each share of common stock of the Corporation will be
converted into the right to receive, and become exchangeable for, 0.733
of share of SBC common stock, subject to adjustment in the event of
certain contingencies. The shares of stock of the Corporation held
under the Plan in the Company Stock Fund and the ESOP Fund will be
subject to these and other terms of the agreement.
28
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1995
--------------------------------------
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* 97.1% 13,739 shs $315,488 $460,264
Bankers Trust Pyramid
Discretionary Cash Fund 2.1% $9,916 9,916 9,916
-------- --------- ---------
Total Company Stock Fund 99.2% $325,404 $470,180
======== --------- ---------
AIRTOUCH STOCK FUND
(Dollars and units in thousands)
December 31, 1995
---------------------------------------
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% 9,558 shs $138,244 $268,833
Bankers Trust Pyramid
Discretionary Cash Fund 1.0% $3,936 3,936 3,936
-------- -------- ---------
Total Equity Fund 100.0% $142,180 $272,769
======== -------- ---------
EQUITY FUND
(Dollars and units in thousands)
December 31, 1995
---------------------------------------
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* 95.7% 1,077 unt $76,819 $104,551
Bankers Trust Pyramid
Discretionary Cash Fund 2.1% $2,302 2,302 2,302
-------- -------- ---------
Total Equity Fund 97.8% $79,121 $106,853
======== -------- ---------
(* See footnote on page 35.)
29
<PAGE>
PACIFIC TELESIS GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
FOR NONSALARIED EMPLOYEES
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1995
--------------------------------------
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 97.2% 1,555 unt $17,266 $20,587
Bankers Trust Pyramid
Discretionary Cash Fund 2.7% $570 570 570
-------- --------- ---------
Total Bond Fund 99.9% $17,836 $21,157
======== --------- ---------
MONEY MARKET FUND
(Dollars and units in thousands)
December 31, 1995
---------------------------------------
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 94.8% 43,740 unt $43,740 $43,739
Bankers Trust Pyramid
Discretionary Cash Fund 3.9% $1,779 1,779 1,779
-------- -------- ---------
Total Money Market Fund 98.7% $45,519 $45,518
======== -------- ---------
December 31, 1995
--------------------------------------
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* 96.4% 6,505 unt $73,580 $97,438
Bankers Trust Pyramid
Discretionary Cash Fund 2.1% $2,158 2,158 2,158
-------- --------- ---------
Total Balanced Fund 98.5% $75,738 $99,596
======== --------- ---------
(* See footnote on page 35.)
30
<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, 1995
---------------------------------------
Percent
of
Name of Issuer, Maturity Fund Net Principal
Contract
Date and Rate of Interest Assets Amount Cost Value
- --------------------------------- -------- --------- --------- ----------
Contracts with insurance
companies and banks:
Citibank (12/31/97) 5.0% 12.2% $17,529 $17,529 $17,529
Lotsoff Capital Management
(06/30/00) 6.7% 10.7% 15,395 15,395 15,395
Metropolitan Life Insurance
Company (12/31/97) 7.3% 7.0% 10,130 10,130 10,130
Principal Mutual
(12/31/98) 5.6% 5.3% 7,628 7,628 7,628
Prudential Asset Management
Group (12/31/96) 7.9% 6.7% 9,644 9,644 9,644
Allstate Life Insurance Company
(06/30/96) 9.1% 5.6% 7,979 7,979 7,979
John Hancock Mutual Life Insurance
(12/31/96) 6.5% 5.2% 7,448 7,448 7,448
Prudential Asset Management Group
(06/30/99) 7.6% 10.6% 15,230 15,230 15,230
CNA Insurance Company
(06/30/99) 6.75% 6.3% 9,018 9,018 9,018
Allstate Life Insurance Company
(07/05/00) 6.8% 6.7% 9,700 9,700 9,700
Life Insurance Co. of Georgia
(12/31/97) 7.0% 6.3% 9,126 9,126 9,126
American International Life
(06/30/97) 6.7% 4.2% 6,040 6,040 6,040
Provident National Assurance
Company (01/02/98) 6.6% 7.0% 10,040 10,040 10,040
-------- --------- ---------
Total contracts with insurance
companies and banks 93.8% 134,907 134,907 134,907
-------- --------- ---------
Bankers Trust Pyramid
Discretionary Cash Fund 5.9% 8,412 8,412 8,412
-------- --------- ---------
Total Interest Income Fund 99.7% 143,319 143,319 143,319
======== ========= =========
GRAND TOTAL 99.3% $829,117 $1,159,392
======== ========== =========
31
<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 Benefits at December 31, 1995.
* Investment represents 5% or more of the total Net Assets Available for
Benefits at December 31, 1995.
32
<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, 1995
(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 472 N/A $228,603 $228,603 N/A -
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 45 N/A $64,093 $48,662 N/A $15,431
Bankers Trust Pyramid Short-Term Investments
Discretionary Fund 448 $231,117 N/A N/A $231,117 N/A
Pacific Telesis Group Pacific Telesis Group
Common Shares Common Shares 60 $74,027 N/A N/A $74,027 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 benefits at the beginning of the
Plan year, January 1, 1995.
</TABLE>
33
<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 26, 1996
34
