<PAGE>1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1993
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 1-4166
ROCHESTER TELEPHONE CORPORATION
(Exact Name of registrant as specified in its charter)
New York 16-0613330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 South Clinton Avenue 14646-0700
Rochester, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number,
including area code: (716) 777-7100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
------------------- -----------------------
Common Stock, par value $1.00 New York Stock Exchange
per share
4 3/4 Percent Convertible Debentures New York Stock Exchange
Due March 1, 1994
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by
non-affiliates of the registrant as of February 28, 1994 is
$1,587,600,000. The number of shares outstanding of Rochester
Telephone Corporation's common stock (Par Value $1.00 per share)
as of the close of February 28, 1994 is 36,579,066 shares.
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Documents Incorporated by Reference
(1) Portions of the registrant's Annual Report to Shareowners
for fiscal year ended December 31, 1993, as presented in
Exhibit No. 13 of this Form 10-K, are incorporated by
reference in Part II hereof.
(2) Portions of the Notice of Annual Meeting and Proxy
Statement issued by the registrant in connection with its
Annual Meeting of Shareowners to be held April 27, 1994,
as presented in Exhibit No. 99 of this Form 10-K, are
incorporated by reference in Parts III and IV hereof.
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PART I
ITEM 1. BUSINESS
=================
Rochester Telephone Corporation ("Rochester Tel" or the
"Company") is a major U.S. diversified telecommunications firm
with headquarters in Rochester, New York. The Company was
incorporated in 1920 under the laws of New York State to take
over and unify the properties of a predecessor company and
certain properties of the New York Telephone Company which were
located in the same general territory. Currently, the Company's
principal lines of business are Telecommunication Services and
Telephone Operations. Telecommunication Services consists of a
major regional long distance company, cellular and paging
operations, and equipment sales. Telephone Operations consists
of 37 local telephone companies which serve, as of December 31,
1993, approximately 931,650 access lines in 14 states.
Historically, Telephone Operations has provided the
majority of the Company's revenues and income. However, an
increasing percentage of Rochester Tel's revenues and income is
being generated by the Company's long distance and wireless
operations. In 1984, the Company made the strategic decision to
enter the long distance business. It now provides long distance
voice, video and data communication services throughout the
United States with its major marketing and sales focus in
New York State, New England, and the Mid-Atlantic and Midwest
regions. The Company first began providing cellular
communications services in the Rochester, New York metropolitan
area in 1985. Today, it manages wireless communications
operations which serve over 4.3 million potential subscribers in
five states.
Prior to 1988, the Company's Telephone Operations were
heavily concentrated in New York State. Since 1988, the Company
has acquired 29 local telephone companies and has significantly
diversified its geographic base. The Company's largest
telephone operation is in Rochester, New York and serves
approximately 506,520 access lines. The Company refers to the
other 36 telephone companies outside of Rochester, New York as
"Regional Telephone Operations". This latter group now includes
approximately 425,130 access lines and in 1993 reached an
aggregate revenue level greater than the Rochester, New York
Operating Company.
A key strategy for the Company is to provide integrated
communications services for its customers. These integrated
services include long distance, wireless, and local telephone
service as well as selected products and services that the
Company will remarket to customers as a single source provider.
Rochester Tel is committed to growing its business through
expansion of its existing businesses, the development of value
added products and services, and selected acquisitions.
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On February 3, 1993, the Company filed a proposal with the
New York State Public Service Commission (NYSPSC) to open its
Rochester, New York local exchange market to competition.
Adoption of the Company's plan would also result in the
formation of a Holding Company that would own the various
Rochester Tel companies. This filing is discussed in detail
under the caption "Open Market Plan", at page 13, infra.
Rochester Tel and NYNEX have agreed to form a joint
venture, Upstate Partners, to manage and operate certain of
their cellular properties located within New York State. This
joint venture will serve a territory that includes approximately
4,543,000 potential customers and includes the cities of
Buffalo, Syracuse, Rochester, Binghamton, Utica, Elmira
and Watertown, New York. One of Rochester Tel's subsidiaries
will serve as managing partner of Upstate Partners. This is
described in more detail under the caption
"Wireless Communications", at page 7, infra.
On November 3, 1993, the Company announced a management
reorganization to address the needs of specific market segments
and to operate more cost effectively. The reorganization
included the consolidation of redundant systems, a reduction in
the number of customer service centers, and a continuing
emphasis on streamlining and reducing management layers.
Overall, the Company reduced its work force by 7 percent during
1993, and will continue to pursue further reductions in work
force levels.
On December 20, 1993, the Company announced two
transactions. In Alabama, the Company increased its ownership
interest in the South Alabama Cellular Partnership from 50.6
percent to 69.6 percent. In addition, the Company has reached a
definitive agreement to sell the Minot Telephone Company of
North Dakota, representing approximately 26,000 access lines.
Both of these transactions are subject to various regulatory
approvals.
On February 1, 1994, the Company entered into a nonbinding
letter of intent for the purchase of a partnership ("Minnesota
Cellular") which owns the business and assets of a cellular
company serving a Rural Service Area ("RSA") in Minnesota with a
population of approximately 225,000 potential subscribers. The
transaction is anticipated to involve the issuance of the
Company's Common Stock. The transaction is contingent upon
several factors, including the negotiation of a definitive
agreement, approval of the Company's Board of Directors, and
regulatory approvals.
On February 15, 1994, the Company completed a public
offering of its common stock. A total of 2,605,500 new shares
were issued in connection with this offering. The public
offering also included the sale of 2,885,000 shares that were
held by a subsidiary of Sprint Corporation.
The principal executive offices of the Company are located
at 180 South Clinton Avenue, Rochester, New York 14646-0700. The
telephone number is (716) 777-1000.
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Telecommunication Services
==========================
General
- - - -------
The Telecommunication Services segment of Rochester Tel is
comprised of Network Systems and Services, which provides long
distance services, customer premises equipment, and wireless
services. The Company's major deregulated business is long
distance service. While regionally focused in the Northeast,
Mid-Atlantic and Midwest states from a marketing and sales
perspective, customers of the Company's long distance business
enjoy nationwide and international connectivity.
Telecommunication Services' revenues have increased
significantly over the past few years and accounted for 34
percent of Rochester Tel's total revenues for the year ended
December 31, 1993. The Company intends to expand
Telecommunication Services by increasing its existing commercial
and residential customer base, continuing to develop new
products, and effecting selected acquisitions.
Long Distance Services
- - - ----------------------
The Company provides long distance services primarily
through a subsidiary, RCI Long Distance, Inc. ("RCI"). RCI
routes long distance traffic over its 100 percent digital
state-of-the-art network and resells services obtained from
other suppliers to route calls to areas where it does not have
its own facilities. RCI currently owns and operates seven
switching sites. These are located in Rochester, New York; New
York City; Washington, D.C.; Philadelphia, Pennsylvania;
Cleveland, Ohio; Burlington, Vermont; and Manchester, New
Hampshire. RCI is installing a switch in Chicago, Illinois to
handle its increased traffic volume in the Midwest. RCI's
switched services include basic long distance or measured toll
service which is accessible via "1 + dialing", 800 services, a
variety of long distance products targeted at specific consumer
and business segments, and value-added services such as travel
cards, prepaid cards and information services. In addition, RCI
provides flexible billing services such as multi-location
billing, customized accounting codes and electronic billing
features.
RCI currently focuses its marketing efforts in New York
State, New England and the Mid-Atlantic and Midwest regions. In
these regions, RCI markets its products through a direct sales
force, direct marketing campaigns, sales agents and affiliated
local exchange carriers. The majority of RCI's revenues are
derived from small to medium-sized business customers. RCI has
introduced a number of programs designed to attract new long
distance customers. For example, the "Budget Call" feature
enables any telephone user to dial an access code and complete a
call through RCI's long distance network. The cost of the call
is invoiced by the customer's local telephone company.
The rates for such calls are typically 10 percent lower than the
rates charged by the major long distance carriers. Budget Call
is currently available in five states. This program is
anticipated to expand to as many as sixteen states by the end of
1994.
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As part of the Company's overall service integration
strategy, RCI has significantly increased residential usage
through its "Visions Long Distance" program (as described in
"Telephone Operations-General" at page 10) where RCI's long
distance services are marketed through Company-owned as well as
non-affiliated local exchange service providers. Through the
Visions Long Distance program, the Company has achieved
penetrations in excess of 50 percent in several markets as a
result of customer preference for unified billing and service.
Because residential long distance calling volumes peak in the
evenings, on weekends and on holidays, when commercial traffic
tends to be lowest, expanding the residential business increases
revenues with virtually no need to increase existing switching
and transmission facilities.
RCI completed two acquisitions in 1993. In June 1993, the
Company completed the purchase of Budget Call Long Distance Inc.
("Budget Call"), a long distance reseller in Pennsylvania. RCI
then began to utilize the Budget Call program, described earlier
in this section, throughout its long distance markets. On
September 30, 1993, the Company completed the purchase of Mid
Atlantic Telecom, Inc., ("Mid Atlantic"), an interexchange
carrier headquartered in Washington D.C. with operations in New
England and the Mid-Atlantic region. Mid Atlantic had more than
tripled its revenue in the five years prior to the acquisition
to approximately $21 million for the twelve months ended
December 31, 1993. Both purchases served to implement RCI's
strategy to expand its customer and market base. The Company
intends to continue to pursue additional acquisitions to provide
greater economies of size and scale to its operation and to
extend its customer and market reach.
The long distance industry is dominated on a volume basis
by the nation's three largest long distance providers, AT&T, MCI
and Sprint, which generate an aggregate of approximately 86
percent of the nation's long distance revenue of approximately
$59 billion. In each of its markets RCI competes with AT&T, MCI
and Sprint, as well as with other national and regional long
distance companies, for intercity communications transmission
services such as 1 +, dedicated access, 800 service and private
line service. The primary bases for competition in the long
distance business are pricing, product offering, and service.
One element of service includes billing and customer
information. The Company intends to continue to compete
aggressively in the long distance business.
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Wireless Communications
- - - -----------------------
Since 1985, the Company has provided cellular service in
the Rochester Metropolitan Statistical Area ("MSA"), which has a
population of approximately one million, in a partnership with
ALLTEL Corporation. Rochester Tel has an 85 percent interest in
this partnership which currently operates and maintains 25 cell
sites in the Rochester, New York MSA. In addition, in April
1993, the Company acquired a 70 percent interest in a cellular
system serving the Utica-Rome, New York MSA. The Company also
has investments in wireless properties elsewhere in New York
State and in Alabama, Georgia, Illinois and Iowa. The Company,
through its subsidiaries, is a member of the MobiLink marketing
alliance, a nationwide consortium of wireless operators. The
Company intends to continue to pursue additional investments in
cellular or wireless operations. The Company's preference is to
invest in properties which are adjacent to existing
Company-owned properties or where a controlling interest can be
obtained.
Despite intense price competition during the construction
of its network in the Rochester, New York market, the Company's
cellular business has remained profitable since its first full
year of service. This business has consistently increased its
subscriber base while maintaining an efficient cost structure.
On March 12, 1993, the Company and NYNEX signed a
definitive agreement to form a joint venture, Upstate Partners,
in upstate New York. This agreement was amended in December
1993 to add additional properties to the joint venture. A
Rochester Tel subsidiary will operate the 50/50 joint venture,
and has already assumed certain operational responsibilities
under an interim consulting contract. Under the joint venture
agreement, Rochester Tel will contribute its cellular properties
in Rochester, New York, its Utica-Rome Partnership interest,
as well as its Rochester, New York area paging operations.
NYNEX will contribute its cellular properties in Buffalo,
Syracuse, its own minority interests in Utica-Rome and New York
State Rural Service Area ("RSA") No. 1, as well as the
Binghamton and Elmira MSAs. By combining marketing and service
efforts and integrating networks, the Company and NYNEX will be
able to provide seamless cellular service to a population of
more than 4.5 million potential subscribers in upstate New York.
This joint venture has been approved by the New York State
Public Service Commission ("NYSPSC") and is subject to approval
of the Federal Communications Commission (the "FCC") and the
receipt of waivers by NYNEX from the U.S. District Court for the
District of Columbia. The Company anticipates receipt of all
required approvals by mid-1994.
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Cellular systems compete principally on the basis of
network quality, customer service, price and coverage area. Each
market currently has two cellular providers, and the Company's
chief competition in each market is from the other cellular
licensee in that market. The Company believes that its
technological expertise, emphasis on customer service and
development of new products and services make it a strong
competitor.
Several recent FCC initiatives indicate that the Company
is likely to face greater wireless competition in the future.
The FCC has licensed specialized mobile radio ("SMR") system
operators to construct digital mobile communications systems on
existing SMR frequencies in many metropolitan areas throughout
the United States. Also, in September 1993, the FCC announced
its decision to allocate radio frequency spectrum for personal
communications services ("PCS"), a form of wireless
communication using lower power and more cell sites than current
cellular service. The FCC's decision will permit the grant of
seven new licenses: two 30 MHz blocks, one 20 MHz block and
four 10 MHz blocks. (By comparison, the two cellular carriers in
each market currently have 25 MHz of spectrum each.) The Company
has committed resources to evaluating the expansion of wireless
communications to include PCS offerings and, depending upon the
Company's economic evaluations, may participate in the bidding
for these new licenses, which is expected to occur in 1994.
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Cellular Property Ownership Table
=================================
The Company owned the following cellular properties as of
December 31, 1993:
1993 Current Pending
Estimated Ownership Adjusted Proposed Adjusted
Market Population Interest Population Interest Population
- - - ------ ---------- -------- ---------- -------- ----------
New York
Rochester *1,012,000 85.0% 860,200 42.5% 430,100
Orange-
Poughkeepsie 600,000 15.0% 90,000 15.0% 90,000
Binghamton** 305,000 24.0% 73,200 32.5% 99,125
Utica-Rome* 313,000 70.0% 219,100 50.0% 156,500
RSA #2** 231,000 12.5% 28,875 12.5% 28,875
RSA #3* 477,000 22.5% 107,325 22.5% 107,325
Buffalo** 1,180,000 0.0% 0 50.0% 590,000
Syracuse** 665,000 0.0% 0 27.5% 182,875
Elmira** 96,000 0.0% 0 50.0% 48,000
RSA #1 ** 264,000 0.0% 0 20.0% 52,800
Alabama
RSA #4 134,000 69.6% 93,264 69.6% 93,264
RSA #6 118,000 69.6% 82,128 69.6% 82,128
Georgia
RSA #3 202,000 25.0% 50,500 25.0% 50,500
Illinois
RSA #2 250,000 6.7% 16,750 6.7% 16,750
RSA #3 199,000 6.4% 12,736 6.4% 12,736
Iowa
Des Moines 411,000 4.0% 16,440 4.0% 16,440
--------- --------- ---------
Total 6,457,000 1,650,518 2,057,418
RTC Total 4,252,000 1,650,518 2,057,418
Total Managed
Including
Supersystem 4,543,000 1,288,700 1,695,600
* Company managed systems.
** Additional Company managed systems pending completion of the
Supersystem in 1994.
Customer Premises Equipment
- - - ---------------------------
Rotelcom Network Systems ("Rotelcom"), which was
established in 1978, markets and services a wide range of
telecommunications and data equipment for mid- to large-size
business customers, and competes directly with other
interconnect vendors that market telephone systems to businesses
and other enterprises. Rotelcom's product line includes: private
branch exchanges ("PBXs") from Siemens/ROLM and Northern
Telecom; data communications equipment from leading
manufacturers including Dowty and Newbridge; and
videoconferencing equipment from PictureTel. The majority of
Rotelcom's customers are in New York State. Rotelcom is also a
partner in Anixter-Rotelcom, a joint venture telecommunication
supply venture with Anixter Bros., Inc.
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Telephone Operations
====================
General
- - - -------
Through its Telephone Operations, the Rochester, New York
Operating Company and the 36 other local exchange companies
serve, as of December 31, 1993, approximately 931,650 access
lines in 14 states. The local exchange carriers provide local,
toll access and resale services; sell, install and maintain
customer premises equipment; and provide directory services.
Since the beginning of 1988, the Company has invested over $560
million in upgrading its Telephone Operations business and over
$480 million for the acquisition of independent telephone
companies. Over this period, the Company installed advanced
digital switching platforms throughout much of its switching
network. The Company's network in Rochester, New York is over
99 percent digital, making Rochester one of the largest cities
in the United States to be served by a virtually all-digital
network. In aggregate, the 36 local exchange companies outside
of Rochester, New York have over 91 percent digital capability.
This is illustrated in the "Access Line Table" located on page
11. The Company has also achieved substantial cost reductions
through the elimination of duplicative services and procedures
and the consolidation of administrative functions. As of
December 31, 1993, Telephone Operations had 37 employees per ten
thousand access lines. The Company has reduced the number of
telephone employees per ten thousand access lines by over 20
percent since 1988. Rochester Tel believes that additional
reductions in employee levels will be necessary to further
improve the competitive position of its Telephone Operations.
The Company intends to vigorously pursue additional gains in
productivity through reengineering while simultaneously
improving customer service.
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Access Line Table
=================
The table below sets forth certain information with
respect to access lines as of December 31, 1993:
Percent of Total
Company Access
Telephone Properties at Access Lines at Percent
December 31, 1993 Lines December 31, 1993 Digital
======================= ======= ================= =======
Rochester, NY 506,522 54.4% 99.9%
Other NY Companies 82,942 8.9% 100%
------- ------ ----
Total New York 589,464 63.3% 100%
Alabama (1) 26,809 2.9% 100%
Georgia 20,693 2.2% 100%
Illinois (1) 18,187 2.0% 96%
Indiana 4,506 0.5% 100%
Iowa 50,582 5.4% 54%
Michigan (1) 25,635 2.8% 89%
Minnesota 96,680 10.4% 89%
Mississippi 5,064 0.5% 100%
North Dakota 26,292 2.8% 100%
Pennsylvania 33,197 3.6% 100%
Wisconsin 34,541 3.6% 100%
------- ------ ----
Total Other States 342,186 36.7% 91%
Consolidated Access
Lines 931,650 100.0% 96%
======= ====== ====
(1) These companies also have properties in one or more other states
(Florida, Iowa and Ohio).
The Company operates 71 central office and remote switching
centers in Rochester, New York, and a total of 275 central office and
remote switching centers in its other telephone territories. Of the
931,650 access lines in service on December 31, 1993, 669,512 were
residence lines and 262,138 were business lines. Long distance network
service to and from points outside of the telephone companies'
operating territories is provided by interconnection with the lines of
interexchange carriers. As part of the Company's continuing strategy
to provide a greater selection of value-added products, the Rochester,
New York Operating Company introduced advanced services such as Caller
ID, distinctive ringing, directory-assisted call completion, and an
enhanced voice mail platform during 1992 and 1993. The Company is
introducing similar advanced services, where appropriate, at its other
telephone properties.
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The Company is pursuing several alternatives to provide
expanded broadband services to its customers. To date, the
Company has installed over 10,000 miles of fiber optic cable in
the Rochester, New York area to provide its customers with
enhanced capacity and product capability. Throughout its
telephone operations, Rochester Tel has over 24,000 miles of
fiber optic cable in place. The Company is also conducting
marketing trials and testing new technologies such as a video on
demand service utilizing a hybrid fiber-optic/coaxial cable
network. The Company expects to market this technology to
selected customers in its Rochester, New York service area
during the second quarter of 1994. The Company is also
providing expanded broadband services to select customers
outside the Rochester, New York service area. These include
video-distance learning arrangements at certain Midwest region
telephone properties.
In connection with its integration strategy, the Company
has developed a new program known as "Visions Long Distance",
where its local exchange companies resell RCI's long distance
services. The Company believes that many customers prefer the
convenience of obtaining their long distance service through
their local telephone company and receiving a single bill. The
Company introduced Visions Long Distance at nine local telephone
exchange companies in 1993 and intends to extend the program to
additional subsidiaries in 1994. The results of Visions Long
Distance operations are included as part of the
Telecommunication Services segment.
Technological innovation and regulatory change are
accelerating the level of competition in both local exchange and
long distance services. New competitors now have the ability to
provide basic local telephone service in some areas, including
Rochester, New York. To benefit from these technological
advances and broaden the scope and quality of its own product
and service offerings, the Company has increased its fiber and
digital switching capacity throughout its networks and is
pursuing regulatory alternatives such as the Open Market Plan,
which is described in more detail below. Currently, the Company
may be considered the primary provider of basic local telephone
service in its Rochester, New York property and may be
considered the only provider of basic local exchange service in
the various other geographic areas where it has telephone
properties.
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Open Market Plan
- - - ----------------
On February 3, 1993, the Company filed its Open Market Plan
with the New York State Public Service Commission ("NYSPSC").
The plan, if adopted, would open the Rochester, New York local
exchange market to competition. Rochester Tel was the first
communications company in the nation to propose such a plan for
full open local competition. The Open Market Plan would enable
customers to choose their local telephone service provider and
have a broad selection of products, services and prices. It
would also give Rochester Tel the flexibility to broaden the
scope and quality of its own competitive service offerings.
Under the proposed Open Market Plan, the Company's local
exchange operations would be divided into two companies--a
wholesale provider of basic network services ("R-Net") and a
retail provider of telecommunication services ("R-Com"). R-Net
and R-Com would be subsidiaries of the Company, which would
become an unregulated parent holding company. The parent
holding company structure would provide financial flexibility
for the Company to continue the acquisition and diversification
efforts that are necessary for its long-term growth.
R-Net would be a regulated company and would sell basic
network services such as access to the network, transport
between offices, and switching services to R-Com and all other
local telecommunication companies. These local telecommunication
companies, including R-Com, would then package services for
resale to local customers.
R-Com would be an unregulated full service provider of a
broad array of integrated telecommunication services, including
local, long distance, cellular and, potentially, video and other
value-added offerings. R-Com would also be able to package the
network elements purchased from R-Net and other network
providers with services such as flat rate service, measured rate
service, Centrex and ISDN. The Company intends that R-Com would
eventually offer products and services outside of the Rochester,
New York market.
The Open Market Plan must be approved by the NYSPSC.
Negotiations among all interested parties began in 1993,
and determinative action by the NYSPSC is expected during the
second half of 1994. The Company will aggressively pursue
approval of the Open Market Plan but cannot predict whether or
when it will be approved by the NYSPSC, and, if so, in what
form.
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Regulatory Matters
==================
Each of Rochester Tel's local telephone service companies
is regulated by the public utility regulatory agency of the
state in which that company provides local telephone service.
The respective states are listed on the Access Line Table on
page 11. The telecommunication industry has become more
competitive over time. This evolution has also resulted in a
more fluid state regulatory framework. In general, state
regulatory agencies exercise authority over the prices charged
for the provision of local telephone service and intrastate long
distance service, the quality of service provided, the issuance
of securities, the construction of facilities and other
matters. Each of the Company's long distance and wireless
companies may be regulated to a limited extent by the public
utility regulatory agency of the state in which each is
providing service. The Company's long distance and wireless
service providers are also subject to FCC jurisdiction.
(a) Royalty Proceeding. In 1984, the NYSPSC initiated a
proceeding to investigate the issue of whether the Company's
competitive subsidiaries should pay a royalty to the Rochester,
New York local telephone service provider primarily for the
alleged intangible benefits received from the use of the
Rochester Telephone name and reputation. This proceeding
remains unresolved and is discussed in more detail in Item 3,
Legal Proceedings.
(b) Stipulated Agreement. In 1986, the Company and the
NYSPSC entered into an agreement which allowed the Company to
pursue certain acquisitions and investments without further
Commission approval. This agreement was amended three times,
most recently in conjunction with the 1991 acquisition of the
Vista Telephone properties in Minnesota and Iowa from Centel
Corporation. Certain portions of that amendment expired in June
1993, and the Company requested an extension of the expiration
to December 1993. That extension was granted by the Commission
in August 1993. In anticipation of a 1994 resolution on the
Open Market Plan, the Company has elected to not pursue any
further amendment to this agreement at this time. NYSPSC
approval is required to effect additional acquisitions by the
Company.
(c) Wireline Transfer. In August 1989, the Company
filed a petition with the NYSPSC seeking approval of the
transfer of the Rochester, New York Operating Company's interest
in the Rochester, New York wireline cellular business to its
wholly-owned subsidiary, Rochester Tel Mobile Communications
Inc. This application was consolidated with the May 18, 1993
application to form a joint venture with NYNEX to create a
"Supersystem" in upstate New York. The joint venture is
described in more detail on page 4. The NYSPSC approved the
application and transfer on December 10, 1993.
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(d) Incentive Regulation. In January 1990, the NYSPSC
approved an incentive regulation agreement for the Rochester,
New York Operating Company. This agreement expired at the end
of 1992, and the Company proposed a new incentive regulation
agreement in January 1993. An interim settlement was approved
by the NYSPSC in February 1994. The settlement reduces the
Company's revenue requirement in 1993 by $5 million and by an
additional $4.5 million in 1994. Each of these reductions is
subject to adjustment for depreciation changes and the outcome
in the Generic Financing Proceeding, which is discussed on page
17. The amount of allowable depreciation is the subject of a
contested proceeding before the NYSPSC. Fifty percent of the
Rochester, New York Operating Company's earnings in 1994 above
the authorized return on equity of 10.9 percent (also subject to
adjustment in the Generic Financing Proceeding which is
described in more detail below) will be shared with ratepayers,
with the specific form of the sharing to be determined by the
NYSPSC as a part of the Open Market Plan deliberations.
Customers of the Rochester, New York Operating Company will
continue to receive service at a quality level no less than that
enjoyed in 1992. In the event service deteriorates from this
standard, the Rochester, New York Operating Company would be
subject to a penalty of one-half of one percent of its local
service revenues.
(e) Ice Storm. In March 1991, Rochester, New York
experienced a severe ice storm which caused the Rochester, New
York Operating Company to spend approximately $9.7 million to
repair and replace outside plant facilities and to provide
customers billing credits for service disruptions. The
Rochester, New York Operating Company filed a petition with the
NYSPSC requesting that it be allowed to defer and amortize the
portion of those costs which were intrastate expenses. In
November 1991, the NYSPSC approved the deferral and amortization
of $5.2 million of the intrastate local service expenses over a
forty-eight month period beginning January 1, 1992 and the
amortization of $1.6 million of the intrastate long distance
service expenses through June 1993. The Rochester, New York
Operating Company also filed a petition with the FCC requesting
that it be allowed to defer and amortize the portion of the ice
storm expenses that were allocated to or assigned the interstate
jurisdiction. The FCC approved an order effective January 23,
1992, which permitted the Company to begin the amortization of
$2.0 million of interstate expenses over an eighteen month
period. In order to recover the expenses, the FCC permitted the
Rochester, New York Operating Company to establish a temporary
surcharge on interstate switched access charges to be billed to
interexchange carriers and a monthly increase in the interstate
customer access line charges applicable to Centrex and multiline
business customers.
<PAGE>
<PAGE>16
(f) Canton Telephone Company. The Pennsylvania Public
Utility Commission issued an Order to Show Cause on May 29, 1992
against the Canton Telephone Company. The Order required Canton
to show cause why Canton's rates were not unreasonable and
therefore subject to modification. Canton reached a settlement
with the parties. The settlement allows Canton to eliminate
prospectively a state tax adjustment surcharge, to flow through
state deferred taxes, and to amortize a $451,000 reserve
deficiency over three years. Canton agreed to refrain from
filing a rate case for three years and the other parties agreed
that they would not seek a rate reduction from Canton during
this three year period. The Pennsylvania Commission approved
the settlement effective December 17, 1992.
(g) FAS 106. The Company adopted Financial Accounting
Standards Board Statement 106 (FAS 106), "Employers' Accounting
for Postretirement Benefits Other Than Pensions." The estimated
accumulated postretirement benefit obligation as of January 1,
1993 is $125 million. The Company elected to defer the
recognition of the accrued Transition Benefit Obligation over a
period of twenty years. Each state regulatory agency may treat
these obligations differently in the rate-making process. On
September 7, 1993, the NYSPSC issued its Statement of Policy and
Order concerning postretirement benefit and pension accounting.
Consistent with this NYSPSC policy the Rochester, New York
Operating Company included the FAS 106 costs in its incentive
regulation settlement agreement discussed on page 15.
Although the FCC originally rejected the Company's
petition to recover the FAS 106 transition costs through the
rate-making process, the FCC later allowed the Company, subject
to an investigation that remains pending, to recover the portion
of the FAS 106 cost associated with the Transition Benefit
Obligation (the unrecorded postretirement benefit liability)
amortized over a twenty year period. The Company has also
appealed the FCC's original order, but cannot, at this time,
predict the outcome of that proceeding.
(h) Tariff Disaggregation Filing. Effective January 1,
1993, the FCC approved the Company's request to disaggregate the
switched access rates contained in Rochester Tel's interstate
access tariff. Prior to this time, with a few exceptions,
Rochester Tel and its telephone company subsidiaries concurred
in a uniform set of switched access rates. Effective with this
disaggregation, the Company established two sets of switched
access rates: one for the Rochester, New York Operating
Company; and one for most of the subsidiary operating telephone
companies. (Certain of the subsidiary companies continue to
concur in the National Exchange Carrier Association tariff. In
addition, Rochester Tel's Illinois subsidiaries and its
Thorntown Telephone Company subsidiary provide interstate
switched access services under company-specific rates.) On a
consolidated basis, the change is revenue neutral.
<PAGE>
<PAGE>17
(i) Open Market Plan. The Company filed a petition in
February 1993 with the NYSPSC in which the Company requested
approval to reorganize the corporation. This Open Market Plan
is discussed in more detail on page 13. A series of meetings
have been held with the Staff of the NYSPSC and all intervening
parties. Negotiations are in process to reach a stipulated
settlement. Although the Company cannot predict whether a
settlement is likely to occur, a Commission decision is expected
in the second half of 1994.
(j) Vista Telephone Company of Minnesota. Vista
Telephone Company of Minnesota filed a request to increase rates
in March 1993 with the Minnesota Public Service Commission. A
stipulated settlement was executed by all parties and was
submitted for approval to the Minnesota Public Service
Commission. The Administrative Law Judge recommended an annual
regulated revenue increase of $4.5 million. The Company expects
Commission approval during the first quarter of 1994.
(k) Generic Financing Proceeding. In May 1993, the
NYSPSC instituted a Generic Financing Proceeding to review its
financial policy guidelines and to determine if there should be
established a generic rate of return methodology for New York
State local exchange companies. The Company favors a generic
methodology because it would streamline the ratemaking process,
provide all stakeholders a much greater sense of predictability,
and create an environment more conducive to long term planning.
The Company supports the implementation of a generic rate of
return methodology, but it cannot, at this time, predict the
outcome of this proceeding.
(l) Vista Telephone Company of Iowa. Vista Telephone
Company of Iowa filed in August 1993 for a rate increase in Iowa
of approximately $4.5 million but with a temporary increase of
$4.1 million. On February 11, 1994, the Iowa Utilities Board
issued an order approving a proposed settlement of this case.
Under the terms of the proposed order, the Board granted Vista
Iowa an annual revenue increase of $2.9 million.
(m) Undergrounding Proceeding. The NYSPSC, in an order
dated September 21, 1993, stated that the Company's New York
local exchange service providers should, for the next five
years, accrue funds for the purposes of "undergrounding"
construction of distribution plant in "visually significant
areas." Any unspent amounts are to be carried over to the next
year until expensed. The amount of the accrual is determined in
accordance with a NYSPSC approved formula. The Company
estimates the total amount of the accrual to be approximately
$408,000 for all of its New York local exchange companies. The
Company has filed for reconsideration, but cannot predict the
outcome at this time.
<PAGE>
<PAGE>18
Competition
===========
Although traditionally considered a monopoly, the
telecommunications industry has experienced a significant
increase in competition in recent years. Rochester Tel is
intent on meeting and taking advantage of the various business
opportunities which competition provides in the markets where it
operates. The Company is addressing competition by focusing on
improved customer satisfaction, by developing and offering
products and services, and by reducing its cost base and
becoming more efficient.
(a) Local Exchange Networks. Prior to 1968, the
telephone industry alone provided and maintained the telephones
and lines of the public switched telecommunication network. In
that year, an FCC order declared unlawful certain AT&T tariffs
which prohibited customers from attaching their own equipment
to the telephone network. However, the telephone equipment
provided by telephone companies which remained in place on
customers' premises, remained regulated. By a subsequent FCC
order, effective January 1, 1983, telephone companies were
required to deregulate all new telephone equipment. Although
Rochester Tel experiences different levels of network regulation
throughout the geographic territory of its telephone properties,
in general the Company is subject to numerous competitors in the
provision of equipment and facilities used in connection with
the local exchange network.
Since the deregulation of telephone equipment, sales of
telephone equipment has become commonplace throughout all
geographic areas of the United States. The Rochester, New York
Operating Company has responded to this competition through
operation of its retail Phone Centers for the direct sale of
telephone sets, inside wire and telephone outlets. The Phone
Centers also perform as maintenance centers where customers who
lease equipment from the company can pick up or exchange
telephones and receive a credit on their bills if they bring in
a telephone that needs repair. In 1982, the Rochester, New York
Operating Company formed its Consumer Equipment Services
division to maintain all company provided leased equipment as
well as maintain customer-owned equipment on a fee for service
or contract basis. Many of the Company's other local exchange
companies also sell, lease and maintain telephone sets and
equipment.
Business consumer equipment needs are another segment of
the telecommunication network equipment market. The Company's
local exchange companies market equipment and facilities
directly to business consumers in much the same way as they
market to residential customers. In addition, Rotelcom Network
Systems, which was established in 1978, markets and services a
wide range of telecommunications and data equipment for mid-to
large-size business customers, and competes directly with other
interconnect vendors that offer for sale telephone systems to
<PAGE>
<PAGE>19
businesses and other enterprises. Rotelcom's product line
includes: private branch exchanges (PBX's) from ROLM, Siemens
and Northern Telecom; data communications equipment from leading
manufacturers including Dowty and Newbridge; and
videoconferencing equipment from PictureTel. The majority of
Rotelcom's customers are in New York State. Rotelcom is also a
partner in Anixter-Rotelcom, a joint venture telecommunications
supply venture with Anixter Bros., Inc.
Although competitive providers of local exchange basic
service are not expected to be active for the foreseeable future
at the Company's smaller rural properties, local exchange basic
service competition is occurring today in the Rochester, New
York marketplace. For example, FiberNet, Inc. is an alternative
local exchange service provider in Rochester. The Company is
unaware of the exact revenues and market share of the local
exchange market that FiberNet accounts for in the City of
Rochester.
On February 3, 1993, Rochester Tel filed a plan with the
NYSPSC, to open the local telephone market in the Rochester, New
York service area to competition. This plan will enable
customers to choose their local telephone service company and
have a broader selection of products, services and prices. It
will also give the Company greater flexibility to broaden the
scope and quality of its own competitive offerings. See the
discussion on the Open Market Plan on page 13 and Regulatory
Matters on page 17.
Long distance companies largely access their end users
through interconnection with local telephone companies. Those
long distance companies pay access fees to the local telephone
companies for this service. This is one reason the Company
derives at least ten percent of its consolidated gross revenues
from AT&T. The Company provides a number of other services to
AT&T, such as billing and collection.
Companies which provide alternative transmission media
now exist and compete with local exchange companies to provide
access services to long distance companies. Currently, FiberNet
is the only Alternate Access Vendor active in the Rochester, New
York area and no significant Alternate Access Vendors are active
in any of the Company's other properties.
<PAGE>
<PAGE>20
(b) Interexchange Service. During the past two decades,
rulings by the FCC and associated court decisions have
restructured the market for the provision of interexchange
telecommunication services and have opened up this market to
competition. The Company recognized an opportunity to compete
in this market. In 1984, RCI Long Distance was launched and a
digital switching and transmission system was built throughout
the Northeast. Today RCI operates in New York, New England and
the Mid-Atlantic and Midwest regions, an area which accounts for
nearly 25 percent of the nation's total interexchange revenues.
Through arrangements with other interexchange carriers, RCI
provides connectivity to the entire United States and to over
200 countries around the world.
In addition to growing its customer base in its original
operating territory, RCI has expanded its network coverage and
customer base through the acquisition of long distance companies
in the Northeast: RCI Long Distance New England Inc., operating
as Long Distance North (January 1991) and Taconic Long Distance
Service Corp. (July 1991). In 1993, the Company purchased
Mid Atlantic Telecom, Inc., a $20 million regional long distance
company headquartered in Washington, D.C., and Budget Call Long
Distance, Inc., a long distance reseller in Pennsylvania.
A number of companies, including AT&T, MCI, Sprint and
smaller regional long distance companies, compete with RCI and
offer interexchange services such as Wide Area Telephone Service
("WATS"), private line and switched message toll. Given the
competitive nature of the interexchange service industry, RCI is
not aware of its exact market share in any specific market,
however RCI does not believe that it holds a dominant market
position in any market in which it operates.
(c) Wireless. The Company is the managing partner of
Rochester Telephone Mobile Communications ("RTMC"), which is a
partnership with ALLTEL Corporation. The partnership
constructed and now operates a cellular system in all or a part
of the five New York counties which comprise the Rochester, New
York Metropolitan Statistical Area ("MSA") which has a
population of approximately 1.1 million potential subscribers.
The Company has an 85% interest in the Rochester MSA and ALLTEL
Corporation has a 15% interest. Cellular service in the
Rochester MSA began on June 5, 1985, and RTMC currently operates
and maintains 25 cell sites in the Rochester, New York MSA.
RTMC is one of two competing cellular systems in the
Rochester, New York MSA. The other cellular system is Genesee
Telephone Company ("GTC") which does business as Cellular One.
A proposed sale to Southwestern Bell of a controlling interest
in GTC was recently announced. In the cellular industry,
competitive characteristics include the geographic coverage
area, transmission clarity and the price of the service
offerings. Both RTMC and, it is believed, its competitor are
believed to be digitally capable, however neither currently
provides digital service. Because RTC does not have information
on GTC's customer base, it is unable to calculate any specific
assessment of its market share.
<PAGE>
<PAGE>21
In addition to RTMC, the Company has partnership
interests in various other MSAs and RSAs (Rural Service Areas.)
Please see the "Cellular Property Ownership Table" on page 9 for
a breakdown of the Company's cellular ownership interests and
the estimated population in each of the indicated cellular
markets. Although in the future the Company may divest itself
of selected cellular properties, the Company will continue to
place a heavy emphasis on cellular service growth and
expansion. To this end, the Company recently entered into a
nonbinding letter of intent for the purchase of a partnership
which owns the business and assets of a cellular provider in
Minnesota. Please also see the discussion of the Upstate
Partnership's "Supersystem" on page 7.
Environmental and Other Matters
===============================
Underground duct systems are often used to house
telephone cable. Some of the existing ducts are made of a
material containing asbestos. This material poses a potential
removal and disposal problem if a realignment of the duct system
is necessary due to road construction or similar projects. The
Company is in the process of identifying the portions of the
duct system that contain this material so if need be, action may
be taken in a timely fashion to minimize the cost of removal and
disposal of such material. The asbestos presents no health risk
as long as it remains buried and undisturbed. It cannot be
determined how much of the affected underground duct system will
undergo future reconstruction and, therefore, an estimate of the
cost of asbestos removal and disposal cannot be made at this
time.
See Item 3. Legal Proceedings, for discussion of
environmental litigation.
Employees and Labor Relations
=============================
As of December 31, 1993, the Company had 4,376 employees,
of which 3,444 were employees of the various Telephone
Operations businesses, and 932 were employees of the various
Telecommunication Services businesses. At the Rochester, New
York Operating Company, 578 clerical and service workers were
represented by the Rochester Telephone Workers Association
(RTWA) and 719 craft and clerical employees were represented by
the Communications Workers of America (CWA), Local 1170.
Under the current three-year contract between the
Rochester, New York Operating Company and the RTWA, effective
August 15, 1993 bargaining unit employees received a 1.5 percent
general increase plus a .678 percent "Cost of Living Allowance"
increase. The RTWA contract will expire on August 11, 1994.
The current three-year contract between the Rochester,
New York Operating Company and the CWA granted bargaining unit
employees a wage increase of up to 4.75 percent, effective
<PAGE>
<PAGE>22
January 1, 1993. Effective January 1, 1994 employees received a
wage increase of up to 4.5 percent. On January 1, 1995,
employees will receive a wage increase of up to 4.25 percent
plus a "Cost of Living Allowance" increase based on 70 percent
of the movement of the Consumer Price Index above 9.25 percent
during the period from November 1992 to November 1994. The CWA
contract will expire on January 31, 1996.
The International Brotherhood of Electrical Workers
(IBEW) represents 155 employees at Highland, 16 employees at
Sylvan Lake and 12 employees at AuSable Valley. Highland
bargaining unit employees received a 3.85 percent increase in
1993. On May 25, 1993, Highland and the IBEW entered into a
contract which expires February 13, 1997, and provides for an
increase of 4% in September 1994, 4% in September 1995, and no
increase thereafter until the contract is renegotiated. On
September 29, 1992, Sylvan Lake and the IBEW entered into a
three-year contract extension which provides for an increase of
3.0 percent in year one, 3.5 percent in year two, and 5.0
percent in year three of the contract. The current three-year
contract between AuSable Valley and the IBEW granted bargaining
unit employees an average wage increase of 3.6 percent effective
May 1993, and also provides for an average 3.4 percent wage
increase in the final year of the contract. That contract will
expire May 10, 1995.
The IBEW also represents 20 employees of C, C & S Telco,
Inc. Their current contract, which expires in October 1994,
granted bargaining unit employees a 3.0 percent increase in
October 1993. The IBEW additionally represents 6 employees at
Midland, 7 employees at Inland, 1 employee at Lakeside, 1
employee at Prairie, 4 employees at Mt. Pulaski and 19 employees
at Minot. On November 1, 1991, Midland, Inland, Lakeside, Mt.
Pulaski and Prairie entered into a three-year contract with the
IBEW that provided for a 4.0 percent wage increase on November 1, 1993.
Effective January 1, 1993, Minot and the IBEW entered into a
one-year contract with the IBEW which provided for a 1.5 percent
wage increase plus a 1.0 percent lump sum payment based on 1992
wages. A new one year contract between Minot and the IBEW,
ratified December 8, 1993, provides for a lump sum payment equal
to 3 percent of salary.
The CWA, Local 7270, represents 179 employees at Vista
Minnesota. On June 21, 1993, Vista Minnesota and the CWA
entered into a three-year contract which provides for wage
increases of 3.0 percent in June 1994, and a minimum of 2
percent in June 1995, with an opportunity to receive, also in
June 1995, up to an additional 1.25 percent based upon the
performance of the Vista Minnesota telephone operation. The
CWA, Local 7171, represents 95 employees at Vista Iowa. On May
1, 1993, Vista Iowa and the CWA entered into a three-year
contract which provides for wage increases of 2.7 percent in May
1994, and a minimum of 2 percent in May 1995, with an
opportunity to receive, also in May 1995, up to an additional
1.25 percent based upon the performance of the Vista Iowa
telephone operation.
<PAGE>
<PAGE>23
In March, 1994, the Rochester, New York Operating Company
announced a retirement incentive program which would add an
additional five years of age and five years of service credit to
covered employees. As of March 15, 1994, 112 management
employees, and 69 members of the RTWA had announced their
decision to take advantage of this retirement incentive.
ITEM 2. PROPERTIES
===================
The Company's local exchange service providers own, in
their respective operating territories, telephone property which
includes: connecting lines between customers' premises and the
central offices; central office switching equipment; buildings,
land and miscellaneous property; and customer premises
equipment.
The connecting lines include aerial and underground
cable, conduit, poles and wires, and microwave equipment. These
facilities are located on public streets and highways or on
privately owned land. The Company has permission to use these
lands pursuant to governmental consent or lease, permit,
easement, or other agreement.
The central office switching equipment includes
electronic switches and peripheral equipment.
The Company owns or leases the land and buildings in
which its central offices, warehouse space, office and traffic
headquarters are located. The consolidated Company's general
headquarters are located in a leased seven story building at 180
South Clinton Avenue, Rochester, New York. The lease expires in
2003 and is renewable for two successive ten year periods.
The Company's interexchange service providers own
property in their respective operating territories which
includes: fiber optic cable, switching equipment, microwave
equipment, real estate and miscellaneous office and work
equipment. The Company's wireless service providers own
switching equipment, cell site towers and other site equipment,
and miscellaneous office and work equipment.
<PAGE>
<PAGE>24
ITEM 3. LEGAL PROCEEDINGS
==========================
On June 11, 1992, a group of corporate plaintiffs
consisting of Cooper Industries, Inc., Keystone Consolidated
Industries, Inc., The Monarch Machine Tool Company, Niagara
Mohawk Corporation, and Overhead Door Corporation commenced an
action in the United States District Court for the Northern
District of New York seeking contribution from Rotelcom Inc., a
wholly-owned subsidiary of the registrant held through
intervening subsidiaries, and fourteen other corporate
defendants seeking contribution for environmental "response
costs" in the approximate amount of $1.5 million incurred by the
plaintiffs pursuant to a decree entered into by plaintiffs with
the United States Environmental Protection Agency.
The consent decree concerned the clean-up of an
environmental Superfund site located in Cortland, New York. It
is alleged that the corporate defendants disposed of hazardous
substances at the site and are therefore liable under the
Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA). The action is currently in discovery. Rotelcom
Inc. has been vigorously defending this lawsuit. However, the
Company is unable to predict the outcome at this time.
In its Opinion and Order in Case 87-C-8959, issued July 6,
1993, the New York State Public Service Commission (NYSPSC), by
a three-to-two vote, imposed a royalty upon the Company in the
amount of two percent of the total capitalization of the
Company's unregulated operations. The NYSPSC justified the
royalty on two grounds: first, that ratepayers are entitled to
protection from the potential for cost misallocations and
increased risk that accompany diversification of the Company's
basic telephone business; and second, that the Company's
unregulated operations benefit from their use of the Rochester
name and reputation. The NYSPSC rejected the Company's
statutory and constitutional defenses and concluded that it
possessed the authority under the Public Service Law to impose a
royalty and that its imposition is not unconstitutional. Based
upon an initial interpretation of the Order, the Company
estimates that its potential effect is in the range of two
million dollars per year. The royalty, if implemented, would be
an imputation against the Rochester, New York Operating
Company's revenue requirement from regulated intrastate
operations. The NYSPSC ordered the Rochester, New York
Operating Company to file, by August 5, 1993, an accounting plan
to account for the royalty amount, together with a plan for
returning such amount to ratepayers. Although the Rochester,
New York Operating Company requested the NYSPSC to waive this
requirement, the NYSPSC denied this request. In compliance with
the order of the NYSPSC, on August 5, 1993, the Rochester, New
York Operating Company filed its plan.
<PAGE>
<PAGE 25>
On August 6, 1993, the Rochester, New York Operating
Company filed with Supreme Court, Albany County, its petition
pursuant to Article 78 of the New York Civil Practice Law and
Rules seeking judicial review of the NYSPSC's Opinion and
Order. By order dated October 7, 1993, this proceeding was
transferred to the Appellate Division, Third Department. The
Company filed its Brief on December 16, 1993. Respondents'
briefs were filed on February 28, 1994, and reply briefs are
currently due in mid-March. The Court has scheduled the case
for oral argument at its April term. The Company is vigorously
contesting this case and is of the opinion that it will
ultimately prevail, but cannot predict the outcome with any
certainty at this time.
The Regulatory Matters discussion in management's
discussion of Business in Part I, Item 1, on pages 3 through 4
is incorporated herein by reference.
<TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SECURITY HOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange
(Symbol - RTC). The information required by this item is as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
Quarter High Low High Low High Low
------- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Highest and lowest
market prices for the 1st $38.88 $34.63 $34.00 $30.13 $30.38 $26.00
stock by quarter: 2nd 43.50 36.50 33.75 29.13 31.50 29.00
3rd 48.75 41.00 32.88 30.25 31.38 28.25
4th 50.25 43.38 35.75 30.63 34.00 29.75
</TABLE>
Common stock dividends 1st $ .395 $ .385 $ .375
declared per share: 2nd .395 .385 .375
3rd .395 .385 .375
4th .405 .395 .385
------ ------ ------
Total dividends per year $1.590 $1.550 $1.510
====== ====== ======
Number of Shareowners (at December 31)
Individuals 20,338 19,731 18,641
Brokers, nominees and
institutions 421 400 259
------ ------ ------
Total Shareowners 20,759 20,131 18,900
====== ====== ======
<PAGE>
<PAGE>26
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item should be read in conjunction with the
consolidated financial statements and related notes included in Item 14
contained herein, and is as follows (in thousands, except per share data):
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Revenues and Sales $ 906,450 $ 804,049 $ 713,559 $ 612,994 $ 590,345
Income from Continuing
Operations $ 82,720 $ 70,503 $ 75,289 $ 51,935 $ 57,386
Consolidated Net Income $ 82,720 $ 69,431 $ 79,046 $ 51,935 $ 83,944
Earnings per Common Share:
Income before Extra-
Ordinary Items $ 2.42 $ 2.08 $ 2.31 $ 1.71 $ 1.94
Extraordinary Items $ - $ (.03) $ .12 $ - .92
Earnings per Common
Share - Primary $ 2.42 $ 2.05 $ 2.43 $ 1.71 $ 2.86
Earnings per Common
Share-Fully Diluted $ 2.41 $ 2.04 $ 2.42 $ 1.70 $ 2.83
Cash Dividends Declared
per Common Share $ 1.590 $ 1.550 $ 1.510 $ 1.470 $ 1.430
Total Assets $1,510,201 $1,513,897 $1,496,737 $1,198,858 $1,122,147
Long-Term Debt $ 492,555 $ 525,597 $ 591,232 $ 363,020 $ 354,302
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information required by this item is presented in pages 1 through 21 of
Exhibit No. 13 of this Form 10-K and is incorporated herein by reference.
Exhibit 13 consists of material located at pages 26 through 47 of the
Company's Annual Report to Shareowners for the fiscal year ended
December 31, 1993.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of
Price Waterhouse dated January 17, 1994, is presented in pages 23 through 31 of
Exhibit No. 13 to this Form 10-K and are incorporated herein by reference.
Exhibit 13 consists of material located at pages 26 through 47 of the
Company's Annual Report to Shareowners for the fiscal year ended
December 31, 1993.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
<PAGE>
<PAGE>27
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item for the Directors of
Rochester Telephone Corporation is presented on pages 4 through
6 of the definitive Proxy Statement issued in connection with
the Annual Meeting of Shareowners to be held April 27, 1994,
which is Exhibit 99 to this Form 10-K and is incorporated herein
by reference. That information is incorporated by reference
into this Item 10. With respect to the Executive Officers, the
following information is submitted.
Other Positions Held
Name Position and During the Past
(Age) Offices Held Five Years
----- ------------ ---------------------
Ronald L. Bittner Chairman, President President and Chief
(52) and Chief Executive Executive Officer;
Officer since April Executive Vice
1993 President - Tele-
communications Group
Jeremiah T. Carr Corporate Vice Corporate Vice
(51) President and President and President
President - Tele- Rochester Telephone
phone Group since Operations; President
November 1993 - Regional Telephone
Operations; President
of Rotelcom; Vice
President - RCI
Consumer Markets;
President - RTMC
Dale M. Gregory Corporate Vice Corporate Vice
(45) President and President and Presi-
President - Tele- dent-Network Systems
communication and Services;
Group since Corporate Vice
November 1993 President and President
- Telecommunication
Services; President -
RCI Network and
Systems; Consultant;
President and Chief
Operating Officer,
Advanced
Telecommunications Inc.
Louis L. Massaro Corporate Vice Corporate Vice
(47) President-Finance President and Presi-
and Treasurer dent-Rochester
since February 1993 Operations; Vice
President - Tele-
communications Group
<PAGE>
<PAGE>28
Frederick R. Pestorius Corporate Vice Corporate Vice
(52) President and President and Presi-
President-Rochester dent - Regional
Business Markets Telephone Operations;
since November 1993 Corporate Vice Presi-
dent - Finance,
Secretary and Treasurer
John K. Purcell Corporate Vice Corporate Vice
(50) President-Corporate President -
Partnering and Planning and Presi-
Alliances since dent - Wireless
November 1993 Operations; Corporate
Vice President -
Development; Corporate
Vice President and
President - Telephone
Subsidiaries
Janet F. Sansone Corporate Vice Corporate Vice Presi-
(48) President - Human dent - Human Resources
Resources and and Excellence; Manager
Corporate Services Management and Human
since November 1993 Resources Education,
General Electric
Corporation; Manager
Recruiting and
University Development,
General Electric
Corporation
Josephine S. Trubek Corporate Secretary General Counsel
(51) since April 1993 and Secretary;
Corporate Counsel
and Assistant
Secretary
The Position and Offices held as set forth above indicates
the capacities in which each Executive Officer serves as of
March 1, 1994. Each Officer serves for a period of one year or
until a successor is elected.
Advanced Telecommunications, Inc. as of March 31, 1992, was
the fourth largest interexchange service provider in the United
States and its common stock was traded on the National Market
System.
General Electric is one of the largest and most diversified
industrial companies in the world. Its businesses include
interests in a vast array of industrial products, as well as
technology, service and communication entities.
<PAGE>
<PAGE>29
PART III
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is presented on pages
8 through 17 of the definitive Proxy Statement for the Annual
Meeting of Shareowners to be held April 27, 1994, under the
captions "Report of Committee on Management," "Performance Graph,"
"Compensation of Company Management" and "Compensation Committee
Interlocks and Insider Participation in Compensation Decisions" and
is incorporated in this report by reference. The Company's Proxy
Statement is found at Exhibit 99 to this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item is presented in the
"Management Security Ownership Table" under the caption
"Security Ownership of Management" on pages 6 through 7 of the
definitive Proxy Statement for the Annual Meeting of Shareowners
to be held April 27, 1994, and is incorporated in this report by
reference. The Company's Proxy Statement is found at Exhibit 99
to this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is presented on page
17 of the definitive Proxy Statement for the Annual Meeting of
Shareowners to be held April 27, 1994, under the caption
"Certain Relationships and Related Transactions", together with
the cross-reference to page 3 of that definitive Proxy
Statement, and is incorporated in this report by reference. The
Company's Proxy Statement is found at Exhibit 99 to this Form
10-K.
<PAGE>
<PAGE>30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) 1. Index to Financial Statements
The financial statements and other information set forth
below for the years 1991 through 1993 together with the
report thereon of Price Waterhouse dated January 17, 1994,
as presented on pages 23 through 31 of Exhibit No. 13 of
this Form 10-K, are filed as part of this report:
Report of Independent Accountants
Business Segment Information
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareowners' Equity
Notes to Consolidated Financial Statements
Exhibit 13 consists of material located at pages 26 through
47 of the Company's Annual Report to Shareowners for the
fiscal year ended December 31, 1993.
2. Index to Financial Statement Schedules for the years
1993, 1992 and 1991
The financial statement schedules listed below should be
read in conjunction with the financial statements appearing
on pages 24 through 31 of Exhibit No. 13 of this Form
10-K. Financial statement schedules not included in this
Form 10-K Annual Report have been omitted because they are
not applicable or the required information is shown on the
financial statements or notes thereto.
Report of Independent Accountants on Financial Statement
Schedules
Property, Plant and Equipment Sch. V
Accumulated Depreciation and Amortization Sch. VI
of Property, Plant and Equipment
Valuation and Qualifying Accounts and Reserves Sch. VIII
Supplementary Income Statement Information Sch. X
Exhibit 13 consists of material located at pages 26 through
47 of the Company's Annual Report to Shareowners for the
fiscal year ended December 31, 1993.
3. See Exhibit Index for list of exhibits filed with
this report.
(b) Reports on Form 8-K.
The Company filed no Forms 8-K during the quarter
ended December 31, 1993.
<PAGE>
<PAGE>31
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Shareowners of
Rochester Telephone Corporation
Our audits of the consolidated financial statements referred to
in our report dated January 17, 1994, appearing on page 23 of
Exhibit No. 13 (which report and consolidated financial
statements are incorporated by reference in this Annual Report
on Form 10-K) also included an audit of the Financial Statement
Schedules listed in Item 14(a) of this Form 10-K. In our
opinion, these Financial Statement Schedules present fairly, in
all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.
/s/ PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
January 17, 1994
<PAGE>
<PAGE>32
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Table 1 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Land and buildings $ 96,206 $ - $ 2,014 $ 498 $ (172) $ 97,550
Local and toll service
lines 718,866 - 30,030 5,089 (779) 743,028
Central office equipment 572,507 - 46,041 34,191 (429) 583,928
Station equipment 96,549 - 3,727 64,674 (862) 34,740
Furniture, office
equipment, vehicles,
tools, etc. 93,857 - 12,309 4,236 (144) 101,786
--------- --------- --------- -------- ---------- ----------
Subtotal $1,577,985 $ - $ 94,121 $108,688 $ (2,386) $1,561,032
Telephone plant under
construction 36,619 - (1,198) 2,351 (22) 33,048
TOTAL $1,614,604 $ - $ 92,923 $111,039 $(2,408) $1,594,080
========= ========= ========= ======== ========== ==========
<FN>
<F1> Includes adjustments, reclassifications and the sale of S&A Telephone Co.
</TABLE>
<PAGE>
<PAGE>33
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Table 2 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Land and buildings $ 91,942 $ - $ 4,434 $ 230 $ 60 $ 96,206
Local and toll service
lines 678,871 - 44,440 5,236 791 718,866
Central office equipment 553,287 - 45,463 26,453 210 572,507
Station equipment 94,878 - 3,468 2,184 387 96,549
Furniture, office
equipment, vehicles,
tools, etc. 89,262 - 7,704 2,741 (368) 93,857
--------- --------- --------- -------- ---------- ----------
Subtotal $1,508,240 $ - $ 105,509 $ 36,844 $ 1,080 $ 1,577,985
Telephone plant under
construction 28,461 - 13,091 3,663 (1,270) 36,619
--------- --------- --------- -------- ---------- ----------
TOTAL $1,536,701 $ - $ 118,600 $ 40,507 $ (190) $ 1,614,604
========= ========= ========= ======== ========== ==========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>34
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Table 3 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Land and buildings $ 74,821 $ 12,164 $ 5,728 $ 661 $ (110) $ 91,942
Local and toll service
lines 533,589 105,866 44,960 5,462 (82) 678,871
Central office equipment 425,013 87,712 48,712 8,314 164 553,287
Station equipment 76,428 18,015 2,335 2,592 692 94,878
Furniture, office
equipment, vehicles,
tools, etc. 72,797 14,389 5,443 3,564 197 89,262
--------- --------- --------- -------- ---------- ----------
Subtotal $1,182,648 $238,146 $107,178 $ 20,593 $ 861 $1,508,240
Telephone plant under
construction 27,564 2,273 (1,115) 706 445 28,461
--------- -------- --------- -------- ---------- ----------
TOTAL $1,210,212 $240,419 $106,063 $ 21,299 $ 1,306 $1,536,701
========= ========= ========= ======== ========== ==========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>35
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Table 1 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant in service:
Land and buildings $ 9,722 $ 16 $ 496 $ 790 $ 171 $ 9,615
Switching and network
facilities 90,218 4,501 8,931 567 67 103,150
Furniture, office
equipment, vehicles,
tools, etc. 38,674 246 4,882 5,237 (927) 37,638
Telecommunications plant under
construction 2,781 - 1,377 - 228 4,386
--------- --------- --------- -------- ---------- ----------
TOTAL $141,395 $ 4,763 $ 15,686 $ 6,594 $ (461) 154,789
Less: Profit on
intercompany purchases 919 - - 84 - 835
--------- --------- --------- -------- ---------- ----------
NET $140,476 $ 4,763 $ 15,686 $ 6,510 $ (461) $153,954
========= ========= ========= ======== ========== ===========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>36
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Table 2 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant
in service:
Land and buildings $ 7,519 $ - $ 848 $ 617 $ 1,972 $ 9,722
Switching and network
facilities 88,145 - 3,897 829 (995) 90,218
Furniture, office
equipment, vehicles,
tools, etc. 40,922 - 1,355 1,845 (1,758) 38,674
Telecommunications plant under
construction 1,782 - 999 - - 2,781
--------- --------- --------- -------- ---------- ----------
TOTAL $138,368 $ - $ 7,099 $ 3,291 $ (781) $ 141,395
Less: Profit on
intercompany purchases 1,003 - - 84 - 919
--------- --------- -------- --------- ---------- ---------
NET $137,365 $ - $ 7,099 $ 3,207 (781) $ 140,476
========= ========= ========= ======== ========== ===========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>37
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Table 3 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct) end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant
in service:
Land and buildings $ 6,357 $ - $ 1,356 $ 194 $ - $ 7,519
Switching and network
facilities 79,834 2,276 6,861 826 - 88,145
Furniture, office
equipment, vehicles,
tools, etc. 35,232 280 5,847 437 - 40,922
Telecommunications plant under
construction 4,788 - (3,006) - - 1,782
--------- --------- --------- -------- ---------- -----------
TOTAL $126,211 $ 2,556 $ 11,058 $ 1,457 $ - 138,368
Less: Profit on
intercompany purchases 1,064 - 13 74 - 1,003
NET $125,147 $ 2,556 $ 11,045 $ 1,383 $ - $137,365
========= ========= ========= ======== ========== ===========
</TABLE>
<PAGE>
<PAGE>38
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Table 1 of 3)
<CAPTION>
In thousands of dollars
Additions
Balance at Property of charged to
beginning Companies costs and Other changes - Balance at
Classification of year Acquired expenses Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Buildings $ 30,557 $ - $ 3,435 $ 569 $ 310 $ 33,733
Local and toll service 262,454 - 32,055 4,889 (1,011) 288,609
Central office equipment 233,198 - 51,088 30,600 4,329 258,015
Station equipment 86,249 - 3,044 64,671 (458) 24,164
Furniture, office
equipment, vehicles,
tools, etc. 48,748 - 10,495 3,834 448 55,857
Unallocated depreciation
reserve 8 - 17 - - 25
Retirement work in progress (3,532) - 8 4,302 1 (7,825)
--------- --------- --------- -------- ---------- ----------
TOTAL $657,682 $ - $100,142 $108,865 $ 3,619 $652,578
========= ========= ========= ======== ========== ========
<FN>
<F1> Represents reclassifications, adjustments for salvage value and/or cost of removal, and the sale of S&A Telephone Co.
</TABLE>
<PAGE>
<PAGE>39
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Table 2 of 3)
<CAPTION>
In thousands of dollars
Additions
Balance at Property of charged to
beginning Companies costs and Other changes - Balance at
Classification of year Acquired expenses Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Buildings $ 27,690 $ - $ 3,275 $ 341 $ (67) $ 30,557
Local and toll service
lines 237,728 - 30,413 5,336 (351) 262,454
Central office equipment 209,411 - 50,048 25,505 (756) 233,198
Station equipment 84,352 - 3,454 2,165 608 86,249
Furniture, office
equipment, vehicles,
tools, etc. 37,741 - 13,290 2,583 300 48,748
Unallocated depreciation
reserve 59 - 8 - (59) 8
Retirement work in progress (2,006) - (3) 1,434 (89) (3,532)
--------- --------- --------- -------- ---------- ----------
TOTAL $594,975 $ - $100,485 $ 37,364 $ (414) $657,682
========= ========= ========= ======== ========== ========
<FN>
<F1> Represents reclassifications and adjustments for salvage value and/or cost of removal.
</TABLE>
<PAGE>
<PAGE>40
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELEPHONE GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Table 3 of 3)
In thousands of dollars
Additions
Balance at Property of charged to
beginning Companies costs and Other changes - Balance at
Classification of year Acquired expenses Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telephone plant in service:
Buildings $ 22,130 $ 3,401 $ 2,852 $ 724 $ 31 $ 27,690
Local and toll service
lines 176,658 39,302 27,411 4,733 (910) 237,728
Central office equipment 140,215 34,760 46,772 14,107 1,771 209,411
Station equipment 68,878 14,941 2,752 2,620 401 84,352
Furniture, office
equipment, vehicles,
tools, etc. 28,897 5,954 6,934 3,797 (247) 37,741
Unallocated depreciation
reserve 16 46 (3) - - 59
Retirement work in progress (6,799) - - (4,789) 4 (2,006)
--------- --------- --------- -------- ---------- ----------
TOTAL $429,995 $ 98,404 $ 86,718 $ 21,192 $1,050 $594,975
========= ========= ========= ======== ========== ========
<FN>
<F1> Represents reclassifications and adjustments for salvage value and/or cost of removal.
</TABLE>
<PAGE>
<PAGE>41
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Table 1 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant
in service:
Buildings $ 3,450 $ 8 $ 811 $ 637 $ 110 $3,742
Switching and network
facilities 28,420 2,296 7,100 285 153 37,684
Furniture, office
equipment, vehicles,
tools, etc. 25,853 49 5,889 4,341 (611) 26,839
--------- --------- --------- -------- ---------- ----------
TOTAL $57,723 $ 2,353 $13,800 $ 5,263 $ (348) $68,265
========= ========= ========= ======== ========== ===========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>42
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Table 2 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct)<F1> end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant in service:
Buildings $ 2,585 $ - $ 761 $ 497 $ 601 $ 3,450
Switching and network
facilities 21,735 - 6,429 138 394 28,420
Furniture, office
equipment, vehicles,
tools, etc. 23,685 - 4,764 1,582 (1,014) 25,853
--------- --------- --------- ---------- ---------- ----------
TOTAL $48,005 $ - $11,954 $ 2,217 $ (19) $57,723
========= ========= ========= ========== ========== ===========
<FN>
<F1> Includes adjustments and reclassifications.
</TABLE>
<PAGE>
<PAGE>43
<TABLE>
ROCHESTER TELEPHONE CORPORATION
TELECOMMUNICATIONS GROUP
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Table 3 of 3)
<CAPTION>
In thousands of dollars
Balance at Property of
beginning Companies Additions Other changes - Balance at
Classification of year Acquired at cost Retirements add/(deduct) end of year
-------------- ---------- ----------- --------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications plant in service:
Buildings $ 2,156 $ - $ 491 $ 62 $ - $2,585
Switching and network
facilities 15,806 - 6,139 210 - 21,735
Furniture, office
equipment, vehicles,
tools, etc. 19,114 - 4,807 236 - 23,685
--------- --------- --------- ---------- ---------- ----------
TOTAL $37,076 $ - 11,437 508 $ - $48,005
========= ========= ========= ========== ========== ===========
</TABLE>
<PAGE>
<PAGE>44
<TABLE>
ROCHESTER TELEPHONE CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Table 1 of 3)
<CAPTION>
In thousands of dollars
Additions
---------------------
Charged
Balance at to costs Charged Balance
beginning and to other at end
Description of year expenses accounts Deductions of year
-------------- ---------- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Reserve for uncollectible
accounts $ 2,455 $11,497 $ 8,531 <F1> $17,405 <F2> $ 5,078
======== ======= ======= ======= =======
Reserve for inventory
obsolescence and shrinkage $ 2,049 $ 1,542 $ (22) $ 1,906 <F3> $ 1,663
======== ======= ======= ======= =======
Reserve for Insurance $ 526 $ (65) $ 9 $ 286 $ 184
======== ======= ======= ======= =======
<FN>
<F1> Recoveries of uncollectible accounts.
<F2> Uncollectible accounts written off.
<F3> Obsolete inventory written off.
</TABLE>
<PAGE>
<PAGE>45
<TABLE>
ROCHESTER TELEPHONE CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Table 2 of 3)
<CAPTION>
In thousands of dollars
Additions
----------------------
Charged
Balance at to costs Charged Balance
beginning and to other at end
Description of year expenses accounts Deductions of year
-------------- ---------- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Reserve for uncollectible
accounts $ 3,144 $ 4,690 $ 5,238 <F1> $10,617 <F2> $ 2,455
======== ======= ======= ======= =======
Reserve for inventory
obsolescence and shrinkage $ 817 $ 2,310 $ (13) $ 1,065 <F3> $ 2,049
======== ======= ======= ======= =======
Reserve for Insurance $ 572 $ 54 $ - $ 100 <F4> $ 526
======== ======= ======= ======= =======
<FN>
<F1> Recoveries of uncollectible accounts.
<F2> Uncollectible accounts written off.
<F3> Obsolete inventory written off.
<F4> Payments to settle insurance cases.
</TABLE>
<PAGE>
<PAGE>46
<TABLE>
ROCHESTER TELEPHONE CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Table 3 of 3)
<CAPTION>
In thousands of dollars
Additions
----------------------
Charged
Balance at to costs Charged Balance
beginning and to other at end
Description of year expenses accounts Deductions of year
-------------- ---------- ----------- --------- ----------- -------
<S> <C> <C> <C> <C> <C>
Reserve for uncollectible
accounts $ 2,392 $ 9,806 <F1>) $ 2,377 <F2> $11,431 <F3> $ 3,144
======== ======= ======= ======= =======
Reserve for inventory
obsolescence and shrinkage $ 859 $ 1,085 $ 25 $ 1,152 <F4> $ 817
======== ======= ======= ======= =======
Reserve for Insurance $ 210 $ 520 $ - $ 158 <F5> $ 572
======== ======= ======= ======= =======
<FN>
<F1> Includes balances as of the respective acquisition dates related to the following 1991 acquisitions:
Minot Telephone Company (January 1991), DePue Telephone Company (March 1991), Vista Telephone Company
of Minnesota (June 1991), Vista Telephone Company of Iowa (August 1991), RCI Long Distance New
England, Inc. (January 1991) and Taconic Long Distance Service Corporation (July 1991).
<F2> Recoveries of uncollectible accounts.
<F3> Uncollectible accounts written off.
<F4> Obsolete inventory written off.
<F5> Payment to settle insurance case.
</TABLE>
<PAGE>
<PAGE>47
ROCHESTER TELEPHONE CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 and 1991
In thousands of dollars 1993 1992 1991
---- ---- ----
1.) Taxes, other than payroll and
income taxes:
State and local property taxes $ 20,572 $ 20,645 $ 21,159
State and local taxes on gross revenues 25,813 23,508 22,900
-------- -------- --------
TOTAL $46,385 $ 44,153 $ 44,059
======== ======== ========
2.) Total maintenance and repairs expense $ 92,147 $100,889 $ 89,436
======== ======== ========
<PAGE>
<PAGE>48
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ROCHESTER TELEPHONE CORPORATION
(Registrant)
/s/ Ronald L. Bittner
Date: March 22, 1994 By ----------------------------
Ronald L. Bittner
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Ronald L. Bittner
Date: March 22, 1994 By ----------------------------
Ronald L. Bittner
Chairman, President and
Chief Executive Officer and
Director
/s/ Louis L. Massaro
Date: March 22, 1994 By ----------------------------
Louis L. Massaro
Corporate Vice President-
Finance and Treasurer
(Principal Financial and
Accounting Officer)
<PAGE>
<PAGE>49
DIRECTORS
*
By ---------------------------
Patricia C. Barron
Date: March 22, 1994
*
By ---------------------------
John R. Block
Date: March 22, 1994
*
By ---------------------------
Harlan D. Calkins
Date: March 22, 1994
*
By ---------------------------
Brenda E. Edgerton
Date: March 22, 1994
*
By ---------------------------
Jairo A. Estrada
Date: March 22, 1994
*
By ---------------------------
Daniel E. Gill
Date: March 22, 1994
*
By ---------------------------
Alan C. Hasselwander
Date: March 22, 1994
*
By ---------------------------
Wolcott J. Humphrey, Jr.
Date: March 22, 1994
* /s/ Louis L. Massaro
By --------------------------- March 22, 1994 By ----------------------
Douglas H. McCorkindale Louis L. Massaro
Date: March 22, 1994 as attorney-in-fact.
* Manually signed powers of attorney
By --------------------------- for each Director are attached
Richard P. Miller, Jr. hereto and filed herewith pursuant
Date: March 22, 1994 to Regulation S-K Item 601(b)25 as
Exhibit 24.
*
By ---------------------------
G. Dennis O'Brien
Date: March 22, 1994
* *
By --------------------------- By ---------------------------
Dr. Leo J. Thomas Michael T. Tomaino
Date: March 22, 1994 Date: March 22, 1994
<PAGE>
<PAGE>50
EXHIBIT INDEX
Exhibit Number Exhibit Reference
- - - -------------- ------- ---------
3.1 Company's Restated Certificate Incorporated by reference
of Incorporation with all to Exhibit 3 to Form 10-Q
Amendments. for the quarter ended
September 30, 1980.
3.2 Certificate of Amendment to Incorporated by reference
Certificate of Incorporation. to Exhibit 3-2 to Form 10-K
for the year ended
December 31, 1984.
3.3 Company's By-Laws. Filed herewith.
3.4 Certificate of Change to Incorporated by reference to
Certificate of Incorporation. Exhibit 3-4 to Form 10-K for
the year ended December 31,
1988.
3.5 Certificates of Amendment to Incorporated by reference to
Restated Certificate of Exhibit 3-5 to Form 10-K for
Incorporation. the year ended December 31,
1990.
4.1 Copy of First Mortgage from the Incorporated by reference
Company to Bankers Trust, as to Exhibits 5 and 5-A to
Trustee, dated as of April 1, Registration Statement No.
1946 as supplemented by In- 2-6544.
denture dated as of July 1,
1946.
4.2 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 2(b)-6 Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated as of 2-9544.
October 1, 1952.
4.3 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 2(b)-5 to Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated as of 2-10547.
November 1, 1954.
4.4 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 4(b)-4 to Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated as of 2-13091.
January 1, 1958.
<PAGE>
<PAGE>51
4.5 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 4(b)-5 to Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated as of 2-16822.
September 1, 1960.
4.6 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 4-6 to Form 10-K
the Company to Bankers Trust for the year ended December
Company, as Trustee, dated as of 31, 1980.
May 1, 1964.
4.7 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 2-B(7) to Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated 2-20488.
March 1, 1971.
4.8 Copy of Supplemental Indenture Incorporated by reference
to said First Mortgage, made by to Exhibit 2-B(8) to Reg-
the Company to Bankers Trust istration Statement No.
Company, as Trustee, dated as 2-50804.
of March 1, 1975.
4.9 Copy of Indenture between the Incorporated by reference
the Company and Morgan Guaranty to Exhibit 2(b) to Reg-
Trust Company of New York, istration Statement No.
Trustee, dated as of 2-20488.
July 1, 1962.
4.10 Copy of Indenture between the Incorporated by reference
the Company and Morgan Guaranty to Exhibit 2(b) to Reg-
Trust Company of New York, istration Statement No.
Trustee, dated as of 2-31753.
March 1, 1969.
4.11 Agreement to furnish documents Filed herewith.
of subsidiaries.
4.12 Copy of Indenture between the Incorporated by reference to
Company and Manufacturers Exhibit 4-12 to Form
Hanover Trust Company, Trustee, 10-K for the year ended
dated as of September 1, 1986. December 31, 1986.
4.13 Copy of First Supplemental Incorporated by reference
Indenture to said Indenture, to Exhibit 4(b) to
made by the Company to Registration Statement
Manufacturers Hanover Trust No. 33-32035.
Company, as Trustee, dated
as of December 1, 1989.
<PAGE>
<PAGE>52
4.14 Agreement to Furnish Copies of Incorporated by reference
Debt Instruments. to Exhibit 4(c) to Reg-
istration Statement No.
33-20698.
4.15 Copy of 10.46% Non Negotiable Incorporated by reference
Convertible Debenture due to Exhibit 4-14 to Form
October 27, 2008 from the 10-K for the year ended
Company to The Walters Trust. December 31, 1988.
4.16 Copy of 9% Debenture due Incorporated by reference
August 15, 2021. to Exhibit 4-16 to Form
10-K for the year ended
December 31, 1991.
10.1 Copy of the Company's Bonus Incorporated by reference
Plan. to Exhibit 10-7 to Form 10-K
for the year ended
December 31, 1986.
10.2 Copy of the Company's Restated Incorporated by reference
Management Investment and Savings to Exhibit 10-11 to Form
Plan/Management Optional Salary 10-K for the year ended
Treatment Plan and Amendment December 31, 1987.
No. 1 thereto.
10.3 Copy of the Company's Long Term Incorporated by reference
Disability Plan together with to Exhibit 10-15 to Form
Amendment No. 1 thereto. 10-K for the year ended
December 31, 1987.
10.4 Copy of the Company's Restated Incorporated by reference
Management Pension Plan and to Exhibit 10-13 to Form
Amendments Nos. 1-5 thereto. 10-K for the year ended
December 31, 1988.
10.5 Copy of Amendments Nos. 2 and 3 Incorporated by reference
to the Company's Restated Manage- to Exhibit 10-15 to Form
ment Investment and Savings Plan/ 10-K for the year ended
Management Optional Salary Treat- December 31, 1988.
ment Plan.
10.6 Copy of the Company's Executive Incorporated by reference
Pre-Pension Leave Plan. to Exhibit 10-18 to Form
10-K for the year ended
December 31, 1988.
10.7 Form of management contracts with Filed herewith.
each of Mr. Bittner, Mr. Gregory,
Mr. Massaro and Mr. Purcell.
<PAGE>
<PAGE>53
10.8 Copy of Amendments Nos. 4 and 5 Incorporated by reference to
to the Company's Restated Exhibit 10-23 to Form 10-K
Management Investment and for the year ended
Savings Plan/Management December 31, 1989.
Optional Salary Treatment Plan.
10.9 Copy of Amendments Nos. 6, 7, 8 Incorporated by reference to
and 9 to the Company's Restated Exhibit 10-13 to Form 10-K
Management Pension Plan. for the year ended December
31, 1990.
10.10 Copy of the Company's Restated Incorporated by reference to
Supplemental Management Exhibit 10-14 to Form 10-K
Pension Plan and Amendments Nos. 1 for the year ended
and 2 thereto. December 31, 1990.
10.11 Copy of the Company's Restated Incorporated by reference to
Performance Unit Plan. Exhibit 10-15 to Form 10-K
for the year ended December
31, 1990.
10.12 Management contract with Filed herewith.
Mr. Pestorius.
10.13 Copy of Joint Venture Agreement, Incorporated by reference to
dated as of March 9, 1993, by and Exhibit 10-13 to Form 10-K
between Rochester Tel Cellular for the year ended
Holding Corporation and New York December 31, 1992.
Cellular Geographic Service Area,
Inc. together with Exhibit A thereto.
10.14 Copy of Cellular Consulting and Incorporated by reference to
Other Services Agreement, dated as Exhibit 10-14 to Form 10-K
of March 9, 1993, by and between for the year ended
Rochester Tel Cellular Holding December 31, 1992.
Corporation and New York Cellular
Geographic Service Area, Inc.
10.15 Copy of Amendments Nos. 10 and Incorporated by reference to
11 to the Company's Restated Exhibit 10-19 to Form 10-K
Management Pension Plan. for the year ended
December 31, 1991.
10.16 Copy of Amendments Nos. 12 and 13 Incorporated by reference to
to the Company's Restated Exhibit 10-16 to Form 10-K
Management Pension Plan. for the year ended
December 31, 1992.
10.17 Copy of Amendments Nos. 6, 7 and Incorporated by reference to
8 to the Company's Restated Exhibit 10-20 to Form 10-K
Management Investment and Savings for the year ended
Plan/Management Optional Salary December 31, 1991.
Treatment Plan.
<PAGE>
<PAGE>54
10.18 Copy of Amendment No. 9 to the Incorporated by reference to
Company's Restated Exhibit 10-18 to Form 10-K
Management Investment and Savings for the year ended
Plan/Management Optional Salary December 31, 1992.
Treatment Plan.
10.19 Copy of Amendment No. 1 to the Incorporated by reference to
Company's Restated Performance Exhibit 10-21 to Form 10-K
Unit Plan. for the year ended
December 31, 1991.
10.20 Copy of Amendment No. 2 to the Incorporated by reference to
Company's Restated Performance Exhibit 10-20 to Form 10-K
Unit Plan. for the year ended
December 31, 1992.
10.21 Copy of Amendment No. 3 to the Incorporated by reference to
Company's Restated Supplemental Exhibit 10-22 to Form 10-K
Management Pension Plan. for the year ended
December 31, 1991.
10.22 Copy of Amendment No. 4 to the Incorporated by reference to
Company's Supplemental Management Exhibit 10-22 to Form 10-K
Pension Plan. for the year ended
December 31, 1992.
10.23 Copy of the Company's Restated Incorporated by reference to
Supplemental Retirement Savings Exhibit 10-23 to Form 10-K
Plan and Amendment No. 1 thereto. for the year ended
December 31, 1991.
10.24 Copy of Amendment No. 2 to the Incorporated by reference to
Company's Supplemental Retirement Exhibit 10-24 to Form 10-K
Savings Plan. for the year ended
December 31, 1992.
10.25 Copy of the Company's Employee Incorporated by reference to
Assistance Program. Exhibit 10-25 to Form 10-K
for the year ended
December 31, 1992.
10.26 Copy of the Company's Tel Flex Incorporated by reference to
Plan. Exhibit 10-26 to Form 10-K
for the year ended
December 31, 1992.
10.27 Copy of the Company's Directors Incorporated by reference to
Stock Option Plan. Exhibit 10-27 to Form 10-K
for the year ended
December 31, 1992.
10.28 Copy of the Company's Executive Incorporated by reference to
Stock Option Plan and Amendment Exhibit 10-28 to Form 10-K
No. 1 thereto. for the year ended
December 31, 1992.
<PAGE>
<PAGE>55
10.29 Copy of Amendment No. 3 to the Incorporated by
Performance Unit Plan. reference to Exhibit 10-30
to Form 10Q for the quarter
ended March 31, 1993.
10.30 Copy of amendments Nos. 14, 15 Incorporated by
and 16 to the Company's Restated reference to Exhibits 10-31
Management Pension Plan. and 10-32 to Form 10Q for
the quarter ended June 30,
1993.
10.31 Copy of Amendments Nos. 17 and 18 Filed herewith.
to the Company's Restated
Management Pension Plan.
10.32 Copy of Amendment No. 5 Incorporated by reference
to the Supplemental Management to Exhibit 10-33 to Form 10Q
Pension Plan. for the quarter ended
June 30, 1993.
10.33 Copy of Amendment No. 6 Filed herewith.
to the Supplemental Management
Pension Plan.
10.34 Copy of Amendments Nos. 10 and 11 Incorporated by reference
to the Management Investment and to Exhibit 10-34 to Form 10Q
Savings Plan/Management Optional for the quarter ended
Salary Treatment Plan. June 30, 1993.
10.35 Copy of the Employees' Retirement Filed herewith.
Savings Plan.
10.36 Copy of Amendment No. 3 Incorporated by reference
to the Supplemental Retirement to Exhibit 10-35 to Form 10Q
Savings Plan. for the quarter ended
June 30, 1993.
10.37 Copy of Amendment No. 2 Incorporated by reference
to the Long Term Disability to Exhibit 10-36 to Form 10Q
Benefit Plan. for the quarter ended
June 30, 1993.
10.38 Copy of Amendment No. 3 Incorporated by reference
to the Long Term Disability to Exhibit 10-40 to Form 10Q
Benefit Plan. for the quarter ended
September 30, 1993.
10.39 Copy of the Plan for the Deferral Filed herewith.
of Directors Fees and
Amendment No. 1 thereto.
10.40 Copy of the Company's Directors' Filed herewith.
Common Stock Deferred Growth Plan
11 Computation of Fully Diluted Filed herewith.
Earnings Per Share.
<PAGE>
<PAGE>56
13 Portions of the Annual Report Filed herewith.
to Shareowners for Fiscal 1993.
21 Subsidiaries of Rochester Filed herewith.
Telephone Corporation.
23 Consent of Independent Filed herewith.
Accountant as Experts.
24 Powers of Attorney for a Filed herewith.
majority of Directors naming
Louis L. Massaro
attorney-in-fact.
28.1 Form 11-K Information for Filed herewith.
the Company's Management
Investment and Savings Plan
Including the Management
Optional Salary Treatment Plan.
28.2 Form 11-K Information for Filed herewith.
the Company's Craft Savings
Plan-I.
28.3 Form 11-K Information for Filed herewith.
the Company's Craft Savings
Plan-II.
28.4 Form 11-K Information for Filed herewith.
the Company's Retirement Savings
Program for Rochester Telephone
Corporation Subsidiary Companies.
28.5 Form 11-K Information for the Filed herewith.
Company's Vista Telephone
Company Retirement Savings Plan.
28.6 Form 11-K Information for the Filed herewith.
Company's Vista Telephone Company
Retirement Savings Plan for
Bargaining Unit Employees.
28.7 Form 11-K Information for the Filed herewith.
Company's Retirement Savings Plan
for Affiliated Companies of
Rochester Telephone Corporation.
99 Proxy Statement for the Annual Filed herewith.
Meeting of Shareowners to be
held April 27, 1994.
<PAGE>1
EXHIBIT 3.3
ROCHESTER TELEPHONE CORPORATION
By-Laws
As Revised Effective 4/21/93
ARTICLE I
SHAREHOLDERS
Section 1 - Annual Meeting.
An annual meeting of shareholders for the election of
Directors and the transaction of other business shall be held
at such time on any day in the month of April in each year or
on such other date as shall be fixed by the Board of
Directors.
Section 2 - Special Meetings.
Special Meetings of the shareholders may be called by the
Board of Directors. Such meeting shall be held at such time as
may be fixed in the notice of meeting.
Section 3 - Place of Meeting.
Meetings of shareholders shall be held at such place,
within or without the State of New York, as may be fixed in the
notice of meeting.
Section 4 - Notice of Meeting.
Notice of each meeting of shareholders shall be in writing
and shall state the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called.
A copy of the notice of any meeting shall be given,
personally, or by mail, not less than ten or more than fifty
days before the date of the meeting, to each shareholder
entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, with postage
thereon prepaid, directed to the shareholder at the
shareholder's address as it appears on the record of
shareholders, or, if the shareholder shall have filed with the
Secretary of the Corporation a written request that notices be
mailed to some other address, then directed to the shareholder
at such other address.
3/21/83
<PAGE>
<PAGE>2
Section 5 - Inspectors of Election.
The Board of Directors, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may,
and on the request of any shareholder entitled to vote at such
meeting shall, appoint two inspectors. Each inspector, before
entering upon the discharge of the inspector's duties, shall
take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according
to the best of the inspector's ability.
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting
or any shareholder entitled to vote at such meeting, the
inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate
of any fact found by them. Any report or certificate made by
them shall be prima facie evidence of the facts stated and of
the vote as certified by them.
Section 6 - List of Shareholders at Meeting.
A list of shareholders as of the record date, certified by
the Secretary or any Assistant Secretary or by the Transfer
Agent, if any, shall be produced at the meeting of shareholders
upon the request of any shareholder at such meeting or prior
thereto. If the right to vote at any meeting is challenged, the
inspectors of election, or person presiding at such meeting,
shall require such list of shareholders to be produced as
evidence of the right of the persons challenged to vote at such
meeting, and all persons who appear from such list to be
shareholders entitled to vote at such meeting may vote at such
meeting.
3/21/83
<PAGE>
<PAGE>3
Section 7 - Qualification of Voters.
Every shareholder of record of common stock of the
Corporation shall be entitled at every meeting of shareholders
to one vote for every share of common stock held by the
shareholder in the shareholder's name on the record of
shareholders, subject, however, to the voting rights granted to
the holders of Cumulative Preferred Stock of the Corporation
upon default in dividends thereon.
Section 8 - Quorum of Shareholders.
The holders of a majority of the shares entitled to vote
at such meeting shall constitute a quorum at a meeting of
shareholders for the transaction of any business, provided that
when a specified item of business is required to be voted on by
a class or series, voting as a class, the holders of a majority
of the shares of such class or series shall constitute a quorum
for the transaction of such specified item of business.
The shareholders present, in person or by proxy, and
entitled to vote may, by a majority of votes cast, adjourn the
meeting despite the absence of a quorum.
Section 9 - Vote of Shareholders.
Directors shall, except as otherwise required by law, or
by the certificate of incorporation as permitted by law, be
elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the
election.
Whenever any corporate action, other than the election of
Directors, is to be taken by vote of the shareholders, it shall,
except as otherwise required by law, or by the certificate of
incorporation as permitted by law, be authorized by a majority
of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote thereon.
3/21/83
<PAGE>
<PAGE>4
Section 10 - Proxies.
Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting
may authorize another person or persons to act for that
shareholder by proxy. Every proxy must be signed by the
shareholder or the shareholder's attorney-in-fact. No proxy
shall be valid after the expiration of eleven months from the
date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder
executing it except in those cases where an irrevocable proxy
permitted by statute has been given.
Section 11 - Fixing Record Date.
For the purpose of determining the shareholders entitled
to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent or dissent from any
proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action,
the Board of Directors may fix, in advance, a date as the record
date for any such determination of shareholders. Such date
shall not be more than fifty nor less than ten days before the
date of such meeting, nor more than fifty days prior to any
other action.
ARTICLE II
BOARD OF DIRECTORS
Section 1 - Power of Board and Qualification of Directors.
The business of the Corporation shall be managed under the
direction of its Board of Directors, each of whom shall be at
least twenty-one years of age.
3/21/83
<PAGE>
<PAGE>5
Section 2 - Number of Directors.*
At the annual meeting of shareholders, the shareholders
shall elect fourteen directors.
Section 3 - Election, Term and Qualifications of Directors.
At each annual meeting of shareholders, Directors shall be
elected to hold office until the next annual meeting and until
their successors have been elected and qualified. No person
shall be eligible for election or reelection to the Board of
Directors after reaching seventy years of age, or in the case of
a retired Chairman of the Board of Directors or a retired
President of the Corporation, after reaching sixty-seven years
of age. The term of any Director who is also an Officer of the
Corporation or any subsidiary of the Corporation, other than the
Chairman of the Board or the President of the Corporation, shall
end on the date of termination from active employment and such
officer shall thereafter be ineligible for reelection to the
Board of Directors.
Section 4 - Quorum of the Board: Action by the Board.
One-third of the entire Board of Directors shall
constitute a quorum for the transaction of business, and the
vote of a majority of the Directors present at the time of such
vote, if a quorum is then present, shall be the act of the
Board.
Section 5 - Action Without a Meeting.
Any action required or permitted to be taken by the Board
or any committee thereof may be taken without a meeting if all
members of the Board or of the committee consent in writing to
the adoption of the resolution authorizing the action. The
resolution and the written consents thereto by the members of
the Board or committee shall be filed with the minutes of the
proceedings of the Board or committee.
3/21/83
*Revised 7/16/84, 2/17/86, 11/20/89, 2/19/90, 11/19/90, 4/24/91
<PAGE>
<PAGE>6
Section 6 - Participation in Board Meetings by Conference
Telephone.
Any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of such Board or
committee by means of a conference telephone or similar
communications equipment allowing all persons participating in
the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
Section 7 - Meetings of the Board.
An annual meeting of the Board of Directors shall be held
in each year directly after adjournment of the annual
shareholders' meeting. Regular meetings of the Board shall be
held at such times as may from time to time be fixed by
resolution of the Board. Special meetings of the Board may be
held at any time upon the call of the Chairman of the Board of
Directors, if such there be, the President or any two Directors.
Meetings of the Board of Directors shall be held at such
place, within or without the State of New York, as from time to
time may be fixed by resolution of the Board for annual and
regular meetings and in the notice of meeting for special
meetings. If no place is so fixed, meetings of the Board shall
be held at the office of the Corporation in Rochester, New York.
No notice need be given of annual or regular meetings of
the Board of Directors. Notice of each special meeting of the
Board shall be given by oral, telegraphic or written notice,
duly given or sent or mailed to each Director not less than one
(1) day before such meeting.
Section 8 - Resignation.
Any Director may resign at any time by giving written
notice to the Chairman of the Board of Directors, if such there
be, to the President or to the Secretary. Such resignation shall
take effect at the time specified in such written notice, or if
no time be specified, then on delivery. Unless otherwise
specified in the written notice, the acceptance of such
resignation by the Board of Directors shall not be needed to
make it effective.
3/21/83<PAGE>
<PAGE>7
Section 9 - Newly Created Directorships and Vacancies.
Newly created directorships resulting from an increase in
the number of directors and vacancies occurring in the Board of
Directors may be filled by vote of the Board. If the number of
the directors then in office is less than a quorum, such newly
created directorships and vacancies may be filled by vote of a
majority of the directors then in office. A director elected to
fill a vacancy shall be elected to hold office for the unexpired
term of such director's predecessor.
Section 10 - Executive and Other Committees of Directors.*
The Board of Directors, by resolution, adopted by a
majority of the entire Board, shall designate from among its
members an Executive Committee consisting of three or more
Directors, a majority of whom are outside directors.
The Executive Committee shall have all the authority of
the Board, except that it shall not have authority as to the
following matters:
(1) The submission to shareholders of any action that
needs shareholders' approval;
(2) The filling of vacancies in the Board or in any
committee;
(3) The amendment or repeal of the By-Laws, or the
adoption of new By-Laws;
(4) The amendment or repeal of any resolution of the
Board which, by its terms, shall not be so amendable
or repealable;
(5) The fixing of compensation of the directors for
serving on the Board or on any Committee;
(6) The fixing or amendment of the compensation, benefits
and perquisites of the chief executive officer.
3/21/83
*Revised 11/19/84
Revised 4/22/87
Revised 4/29/92
Revised 4/21/93
<PAGE>
<PAGE>8
The Board of Directors, by resolution by a majority of the
entire Board, may designate from among its members an Audit
Committee consisting of three or more outside directors. The
Audit Committee shall, among other things, review the scope of
audit activities, review with management significant issues
concerning litigation, contingencies or other material matters
which may result in either potential liability of the Company or
significant exposure to the Company, review significant matters
of corporate ethics, review security methods and procedures,
review the financial reports and notes, and make reports and
recommendations with respect to audit activities, findings, and
reports of the independent public accountants and the internal
audit staff of the Company.
The Board of Directors, by resolution adopted by a
majority of the entire Board, may designate from among its
members a Committee on Directors consisting of three or more
outside directors. The Committee on Directors shall, among
other things, review performance of incumbent directors, act as
a nominating committee, and consider and report to the entire
Board of Directors on all matters relating to the selection,
qualification, compensation and duties of the members of the
Board of Directors and any committees of the Board of Directors.
The Board of Directors, by resolution adopted by a
majority of the entire Board, may designate from among its
members a Committee on Management consisting of three or more
outside directors. The Committee on Management shall, among
other things, fix or amend the compensation, benefits and
perquisites of all executive officers of the Company and
recommend such for the chief executive officer, select and
administer executive compensation plans and employee benefit
plans which have Company stock as an investment option, review
succession planning for the Company and review with management
significant human resources issues.
The Board of Directors, by resolution adopted by a
majority of the entire Board, may designate from among its
members other committees each consisting of three or more
directors.
3/21/83
<PAGE>
<PAGE>9
Unless a greater proportion is required by the resolution
designating a committee of the Board of Directors, a quorum for
the transaction of business of a committee shall consist of (a)
a majority of the entire authorized number of members of the
Executive Committee or (b) one-third of the entire authorized
number of members of any other committee of the Board of
Directors, but in no event fewer than two persons. The vote of
a majority of the members of a committee present at the time of
the vote concerning the transaction of business of that
committee or of any specified item of business of that committee
if a quorum is present at such time, shall be the act of such
committee.
Any committee may fix the time and place of holding its
regular meetings and, if so fixed, no notice of such regular
meeting shall be necessary. Special meetings of any committee
may be called at any time by the Chairman of the Board of
Directors, if such there be, by the chief executive officer, by
the President, by the Chairperson of that committee, or by any
two members of that committee. Notice of each special meeting
of any committee shall be given by oral, telegraphic or written
notice, including notice via facsimile machine, duly given or
sent or mailed to each member of that committee not less than
one day before such meeting.
Section 11 - Compensation of Directors.
The Board of Directors shall have authority to fix the
compensation of directors for services in any capacity.
Section 12 - Indemnification.*
(a) Generally.
To the full extent authorized or permitted by law, the
Corporation shall indemnify any person ("indemnified Person")
made, or threatened to be made, a party to any action or
proceeding, whether civil, at law, in equity, criminal,
administrative, investigative or otherwise, including any action
3/21/83
*Revised 2/16/87
<PAGE>
<PAGE>10
by or in the right of the Corporation, by reason of the fact
that he, his testator or intestate, ("Responsible Person"),
whether before or after adoption of this Section 12, (1) is or
was a director or officer of the Corporation, or (2), if a
director or officer of the Corporation, is serving or served, in
any capacity, at the request of the Corporation, any other
corporation, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, or (3), if not a director or
officer of the Corporation, is serving or served, at the request
of the Corporation, as a director or officer of any other
corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise, against all judgments, fines,
penalties, amounts paid in settlement (provided the Corporation
shall have given its prior consent to such settlement, which
consent shall not be unreasonably withheld by it) and reasonable
expenses, including attorneys' fees, incurred by such
Indemnified Person with respect to any such threatened or actual
action or proceeding, and any appeal therein, provided only that
(x) acts of the Responsible Person which were material to the
cause of action so adjudicated or otherwise disposed of were not
(i) committed in bad faith or (ii) were not the result of active
and deliberate dishonesty, and (y) the Responsible Person did
not personally gain in fact a financial profit or other
advantage to which he was not legally entitled.
(b) Advancement of Expenses.
All expenses reasonably incurred by an Indemnified Person
in connection with a threatened or actual action or proceeding
with respect to which such person is or may be entitled to
indemnification under this Section 12 shall be advanced or
promptly reimbursed by the Corporation to him in advance of the
final disposition of such action or proceeding, upon receipt of
an undertaking by him or on his behalf to repay the amount of
such advances, if any, as to which he is ultimately found not to
be entitled to indemnification or, where indemnification is
granted, to the extent such advances exceed the indemnification
to which he is entitled. Such person shall cooperate in good
faith with any request by the Corporation that common counsel be
used by the parties to an action or proceeding who are similarly
situated unless to do so would be inappropriate due to an actual
or potential conflict of interest.
3/21/83
<PAGE>
<PAGE>11
(c) Procedure for Indemnification.
(1) Not later than thirty (30) days following final
disposition of an action or proceeding with respect to which the
Corporation has received written request by an Indemnified
Person for indemnification pursuant to this Section 12, if such
indemnification has not been ordered by a court, the Board of
Directors shall meet and find whether the Responsible Person met
the standard of conduct set forth in paragraph (a) of this
Section 12, and, if it finds that he did, or to the extent it so
finds, shall authorize such indemnification.
(2) Such standard shall be found to have been met unless
(a) a judgment or other final adjudication adverse to the
Indemnified Person establishes that subparagraphs (x) or (y) of
paragraph (a) of this Section 12 were violated, or (b) if the
action or proceeding was disposed of other than by judgment or
other final adjudication, the Board finds in good faith that, if
it had been disposed of by judgment or other final adjudication,
such judgment or other final adjudication would have been
adverse to the Indemnified Person and would have established a
violation of subparagraphs (x) or (y) of paragraph (a) of this
Section 12.
(3) If indemnification is denied, in whole or part,
because of an adverse finding by the Board in the absence of a
judgment or other final adjudication, or because the Board
believes the expenses for which indemnification is requested to
be unreasonable, such action by the Board shall in no way affect
the right of the Indemnified Person to make application therefor
in any court having jurisdiction thereof, and in such action or
proceeding the issue shall be whether the Responsible Person met
the standard of conduct set forth in paragraph (a) of this
Section 12, or whether the expenses were reasonable, as the case
may be (not whether the finding of the Board with respect
thereto was correct) and the determination of such issue shall
not be affected by the Board's finding. If the judgment or
other final adjudication in such action or proceeding
establishes that the Responsible Person met the standard set
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Revised 2/16/87
<PAGE>
<PAGE>12
forth in paragraph (a) of this Section 12, or that the
disallowed expenses were reasonable, or to the extent that it
does, the Board shall then find such standard to have been met
or the expenses to be reasonable, and shall grant such
indemnification, and shall also grant to the Indemnified Person
indemnification of the expenses incurred by him in connection
with the action or proceeding resulting in the judgment or other
final adjudication that such standard of conduct was met, or if
pursuant to such court determination such person is entitled to
less than the full amount of indemnification denied by the
Corporation, the portion of such expenses proportionate to the
amount of such indemnification so awarded.
(4) A finding by the Board pursuant to this paragraph (c)
that the standard of conduct set forth in paragraph (a) of this
Section 12 has been met shall mean a finding of the Board or
shareholders as provided by law.
(d) Contractual Article.
This Section 12 shall be deemed to constitute a contract
between the Corporation and each person who is a Responsible
Person at any time while this Section 12 is in effect. No
repeal or amendment of this Section 12, insofar as it reduces
the extent of the indemnification of any person who could be a
Responsible Person shall without his written consent be
effective as to such person with respect to any event, act or
omission occurring or allegedly occurring prior to (1) the date
of such repeal or amendment if on that date he is not serving in
any capacity for which he could be a Responsible Person, or (2)
the thirtieth (30th) day following delivery to him of written
notice of such repeal or amendment as to any capacity in which
he is serving on the date of such repeal or amendment, other
than as a director or officer of the Corporation, for which he
could be a Responsible Person, or (3) the later of the thirtieth
(30th) day following delivery to him of such notice or the end
of the term of office (for whatever reason) he is serving as
director or officer of the Corporation when such repeal or
amendment is adopted, with respect to being a Responsible Person
in that capacity. No amendment of the Business Corporation Law
shall, insofar as it reduces the permissible extent of the right
of indemnification of a Responsible Person under this Section
12, be effective as to such person with respect to any event,
act or omission occurring or allegedly occurring prior to the
effective date of such amendment irrespective of the date of any
claim or legal action in respect thereto. This Section 12 shall
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<PAGE>13
be binding on any successor to the Corporation, including any
corporation or other entity which acquires all or substantially
all of the Corporation's assets.
(e) Non-exclusivity.
The indemnification provided by this Section 12 shall not
be deemed exclusive of any other rights to which any person
covered hereby may be entitled other than pursuant to this
Section 12. The Corporation is authorized to enter into
agreements with any such person or persons providing them rights
to indemnification or advancement of expenses in addition to the
provisions therefor in this Section 12 to the full extent
permitted by law.
ARTICLE III
OFFICERS
Section 1 - Officers.
The Board of Directors, as soon as may be practicable
after the annual election of directors, may elect a Chairman of
the Board of Directors and shall elect a President, one or more
Vice Presidents (one or more of whom may be designated Executive
Vice President), a Secretary and a Treasurer, and such other
officers as it may determine. Any two or more offices may be
held by the same person, except the office of President and
Secretary.
Section 2 - Term of Office and Removal.
Each officer shall hold office for the term for which each
officer is elected or appointed, and until a successor has been
elected or appointed and qualified.
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<PAGE>14
Section 3 - Powers and Duties.
The officers of the Corporation shall each have such
powers and authority and perform such duties in the management
of the Corporation as set forth in these By-Laws and as from
time to time prescribed by the Board of Directors. To the extent
not set forth in these By-Laws or so prescribed by the Board of
Directors, they shall each have such powers and authority and
perform such duties in the management of the Corporation,
subject to the control of the Board, as generally pertain to
their respective offices.
In addition to the powers and authority above, each
officer has the powers and duties set out below.
(a) Chairman of the Board of Directors
The Chairman of the Board of Directors, if such there be,
shall preside at all meetings of the Board. The Chairman
of the Board of Directors may be the chief executive
officer of the Corporation, and if so designated, may
preside at all meetings of shareholders.
(b) President
The President shall be the chief operating officer and
shall have responsibility for the general management of
the business of the Corporation, subject only to the
supervision of the Board of Directors, the Executive
Committee and the Chairman of the Board of Directors, as
chief executive officer, if such there be. If there is no
Chairman of the Board of Directors or if the Chairman of
the Board of Directors is not the chief executive officer,
then the President shall be the chief executive officer of
the Corporation. The President may preside at all meetings
of shareholders, when present, and at meetings of the
Board of Directors in the absence of the Chairman of the
Board, if such there be.
(c) Executive Vice President
The Executive Vice President or the Executive Vice
Presidents, if such there be, shall assist the President
in the management of the Corporation and, as may be
designated by the Board of Directors, in the event of the
death, resignation, removal, disability or absence of the
President, an Executive Vice President shall possess the
powers and perform the duties of the President for the
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<PAGE>15
period of such disability or absence or until the Board of
Directors elects a President.
(d) Vice President
Each Vice President shall assist the President in the
management of the Corporation and, in the absence or
incapacity of the President and Executive Vice Presidents,
and in order as fixed by the Board, possess the powers and
perform the duties of the President for the period of such
absence or incapacity, and shall possess such other powers
and perform such other duties as the Board of Directors
may prescribe.
(e) Secretary
The Secretary shall issue notices of all meetings of
shareholders and directors where notices of such meetings
are required by law or these By-Laws, and shall keep the
minutes of such meetings. The Secretary shall sign such
instruments and attest such documents as require signature
or attestation and affix the corporate seal thereto where
appropriate and shall possess such other powers and
perform such other duties as usually pertain to the office
or as the Board of Directors may prescribe.
(f) Treasurer
The Treasurer shall have general charge of, and be
responsible for, the fiscal affairs of the Corporation and
shall sign all instruments and documents as require such
signature, and shall possess such other powers and perform
such other duties as usually pertain to the office or as
the Board of Directors may prescribe.
(g) Assistant Officers
Any Assistant Officer elected by the Board of Directors
shall assist the designated officer and shall possess that
officer's powers and perform that officer's duties as
designated by that officer, and shall possess such other
powers and perform such other duties as the Board of
Directors may prescribe.
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<PAGE>16
Section 4 - Records.
The Corporation shall keep (a) correct and complete books
and records of account; (b) minutes of the proceedings of the
shareholders, Board of Directors and any committees of the
Board; and (c) a current list of the directors and officers and
their residence addresses.
The Corporation shall also keep at its office in the State
of New York or at the office of its transfer agent or registrar
in the State of New York, if any, a record containing the names
and addresses of all shareholders, the number and class of
shares held by each and the dates when they respectively became
the owners of record thereof.
Section 5 - Checks and Similar Instruments.
All checks and drafts on the Corporation's bank accounts
and all bills of exchange and promissory notes and all
acceptances, obligations and other instruments, for the payment
of money, shall be signed by facsimile or otherwise on behalf of
the Corporation by such officer or officers or agent or agents
as shall be thereunto authorized from time to time by the Board
of Directors.
Section 6 - Voting Shares Held by the Corporation.
Either the President or the Secretary may vote shares of
stock held by the Corporation in other corporations and may
execute proxies for and on behalf of the Corporation for such
purpose.
ARTICLE IV
SHARE CERTIFICATES AND LOSS THEREOF - TRANSFER OF SHARES
Section 1 - Form of Share Certificate.
The shares of the Corporation shall be represented by
certificates, in such forms as the Board of Directors may from
time to time prescribe, signed by the Chairman of the Board if
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<PAGE>17
such there be, or the President or a Vice President, and the
Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the certificate
is countersigned by a transfer agent or registered by a
registrar other than the Corporation or its employee. In case
any officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such
officer at the date of issue.
Section 2 - Lost, Stolen or Destroyed Share Certificates.
No certificate or certificates for shares of the
Corporation shall be issued in place of any certificate alleged
to have been lost, stolen or destroyed, except upon production
of such evidence of the loss, theft or destruction, and upon
such indemnification and payment of costs of the Corporation and
its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe. The Board of
Directors, in its discretion, and as a condition precedent to
the issuance of any new certificate, may require the owner of
any certificate alleged to have been lost, stolen or destroyed
to furnish the Corporation with a bond, in such sum and with
such surety or sureties as it may direct, as indemnity against
any claim that may be made against the Corporation in respect of
such lost, stolen or destroyed certificate.
Section 3 - Transfer of Shares.
Shares of the Corporation shall be transferable on the
books of the Corporation by the registered holder thereof in
person or by the registered holder's duly authorized attorney,
by delivery for cancellation of a certificate or certificates
for the same number of shares, with proper endorsement
consisting of either a written assignment of the certificate or
a power of attorney to sell, assign or transfer the same or the
shares represented thereby, signed by the person appearing by
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<PAGE>
<PAGE>18
the certificate to be the owner of the shares represented
thereby, either written thereon or attached thereto, with such
proof of the authenticity of the signature as the Corporation or
its agents may reasonably require. Such endorsement may be
either in blank or to a specified person, and shall have affixed
thereto all stock transfer stamps required by law.
ARTICLE V
OTHER MATTERS
Section 1 - Corporate Seal.
The corporate seal shall have inscribed thereon the name
of the Corporation and such other appropriate legend as the
Board of Directors may from time to time determine. In lieu of
the corporate seal, when so authorized by the Board, a facsimile
thereof may be affixed or impressed or reproduced in any other
manner.
Section 2 - Amendments.
By-Laws of the Corporation may be amended, repealed or
adopted by vote of the holders of the shares at the time
entitled to vote in the election of any directors. By-Laws may
also be amended, repealed, or adopted by the Board of Directors,
but any By-Law adopted by the Board may be amended or repealed
by the shareholders entitled to vote thereon as hereinabove
provided.
If any By-Law regulating an impending election of
directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next
meeting of shareholders for the election of directors the By-Law
so adopted, amended or repealed, together with a concise
statement of the changes made.
END
8ED
<PAGE>
EXHIBIT 4.11
Rochester Telephone Corporation has not filed any
instrument defining the rights of holders of long-term debt of
its subsidiaries because the amounts authorized under any such
instrument do not exceed ten percent (10%) of the total assets
of Rochester Telephone Corporation and its subsidiaries on a
consolidated basis. Rochester Telephone Corporation agrees to
furnish a copy of any such instrument to the Securities and
Exchange Commission upon its request.
(50ED)
<PAGE>1
EXHIBIT 10.7
FORM OF MANAGEMENT CONTRACT
DATE
Dear NAME:
Rochester Telephone Corporation ("RTC"), as defined in
Paragraph 7(a) hereof, a New York corporation, considers the
establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of RTC, its
shareholders and its ratepayers. In this connection, RTC recognizes
that, as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of RTC and its shareholders.
Accordingly, the Board of Directors of RTC (the "Board") has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of certain members
of RTC's management to their assigned duties without distraction in
circumstances arising from the possibility of a change in control of
RTC. In particular, the Board believes it important, should RTC or
its shareholders receive a proposal for transfer of control of RTC,
that you be able to assess and advise the Board whether such
proposal would be in the best interests of RTC and its shareholders
and to take such other action regarding such proposal as the Board
might determine to be appropriate, without being influenced by the
uncertainties of your own situation.
In order to induce you to remain in the employ of RTC, this
letter agreement, which has been approved by the Board, sets forth
the severance benefits which RTC agrees will be provided to you in
the event your employment with RTC is terminated subsequent to a
"Change in Control" of RTC under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
a. Except as otherwise provided herein, RTC or you
may terminate your employment at any time, subject
to RTC's providing the benefits hereinafter
specified in accordance with the terms hereof.
b. In the event a tender offer or an exchange offer
is made by a person (which shall include any
individual, corporation, partnership, group,
association or other "person", as such term is
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) for 30% or more of RTC's then outstanding
Common Stock, or in the event any person (as
hereinbefore defined) announces an intention or
proposal to commence, or actually commences, a
proxy fight which could result in the Incumbent
<PAGE>
<PAGE>2
Board (as that term is defined in Paragraph
3(a)(iv) hereof) ceasing to constitute at least a
majority thereof, you agree that you will not
leave the employ of RTC (other than as a result of
Disability or Retirement) and will render the
services contemplated in the recitals to this
Agreement until such tender offer, exchange offer
or proxy fight has been abandoned or terminated or
a Change in Control of RTC, as defined in
Paragraph 3(a) hereof, has occurred.
c. In the event any person (as that term is used in
Sections 13(d) and 14(d) of the Exchange Act)
publicly announces an intention or proposal to
consolidate or merge with RTC, to obtain by
purchase, lease or any other form of transfer all
or substantially all of the assets of RTC, or to
effect a liquidation or dissolution of RTC, you
agree that you will not leave the employ of RTC
(other than as a result of Disability or
Retirement) and will render the services
contemplated in the recitals to this Agreement for
the reasonable duration of the previously
mentioned event or until such event has been
abandoned or terminated or a Change in Control of
RTC, as defined in Paragraph 3(a) hereof, has
occurred.
d. Following a Change in Control as defined in
Paragraph 3(a), you agree to provide services to
RTC or its successor for a minimum of three
years. Such services shall be of authority and
responsibility substantially commensurate to those
you provided immediately before the Change in
Control.
2. Term
This Agreement shall remain in effect unless terminated
upon sixty (60) days prior written notice delivered by
one party to the other party, except that:
a. this Agreement shall terminate immediately
i. upon the termination of your active
employment with RTC based on your death,
Retirement (as defined in Paragraph 3(b)
hereof), or Disability (as defined in
Paragraph 3(c) hereof), or Voluntary
Termination (as defined in Paragraph 3(f)
hereof), or for Cause (as defined in
<PAGE>
<PAGE>3
Paragraph 3(d) hereof), or upon your
termination of your employment other than
(i) for Good Reason (as defined in Paragraph
3(e) hereof) or (ii) during the Window
Period (as defined in Paragraph 3(g)
hereof); or
ii. three (3) years from the date of a Change in
Control if you have not terminated your
employment for Good Reason, and you have not
been terminated by RTC other than for Cause,
before such time; and
b. this Agreement may not be terminated subsequent to
a Change in Control except as provided in
Paragraphs 2(a)(i) and (ii) hereof, or subsequent
to a tender offer, exchange offer, proxy fight or
announcement of an event (as described in
Paragraphs 1(b) and 1(c) hereof) unless and until
the offer or proxy fight is abandoned or
terminated, or such announcement is abandoned or
terminated or the event is given reasonable time
to occur, or a Change in Control occurs (and if
such a Change in Control occurs this Agreement may
be terminated only as provided in Paragraphs
2(a)(i) and (ii) hereof).
3. Definitions
Whenever used in this Agreement, the following terms
shall have the meanings set forth below:
a. "Change in Control" shall be deemed to have
occurred if
i. there shall be consummated
A. any consolidation or merger of RTC in
which RTC is not the continuing or
surviving corporation or pursuant to
which any shares of RTC's Common Stock
are to be converted into cash,
securities or other property, provided
that, the consolidation or merger is
not with a corporation which was a
wholly-owned subsidiary of RTC
immediately before the consolidation or
merger; or
B. any sale, lease, exchange or other
transfer (in one transaction or a
series of related transactions) of all,
or substantially all, of the assets of
RTC; or
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<PAGE>4
ii. the stockholders of RTC approve any plan or
proposal for the liquidation or dissolution
of RTC; or
iii. any person (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), shall
become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, of 30% or more
of RTC's then outstanding Common Stock,
provided that, such person shall not be a
wholly-owned subsidiary of RTC immediately
before it becomes such 30% beneficial owner;
or
iv. individuals who constitute the Board on the
date hereof (the "Incumbent Board") cease
for any reason to constitute at least a
majority thereof, provided that any person
becoming a director subsequent to the date
hereof whose election, or nomination for
election by RTC's shareholders, was approved
by a vote of at least three-quarters of the
directors comprising the Incumbent Board
(either by a specific vote or by approval of
the proxy statement of RTC in which such
person is named as a nominee for director,
without objection to such nomination) shall
be, for purposes of this clause (iv),
considered as though such person were a
member of the Incumbent Board.
b. "Retirement" means a voluntary or involuntary
termination of employment after age 65 or any
voluntary termination at age 65 or earlier that
entitles you to receive a normal or early
retirement service pension under Sections 5.1
through 5.3 of the RTC Management Pension Plan (or
any successor or substitute plan or plans of RTC
put into effect prior to a Change in Control).
c. "Disability" means a physical or mental condition
which permanently prevents you from satisfactorily
performing your usual duties for RTC. In the
event RTC asserts that you are disabled for the
purposes of this Agreement and you challenge that
assertion, you shall have the right to pursue all
legal remedies and you shall be entitled to
receive all payments pursuant to Paragraph 9 of
this Agreement.
<PAGE>
<PAGE>5
d. "Cause" means (i) the willful and continued
failure by you to perform substantially your
duties with RTC (other than any such failure
resulting from your incapacity due to physical or
mental illness) after a demand for substantial
performance is delivered to you by the Committee
on Management Chairman or the Executive Committee
Chairman of RTC's Board of Directors, or RTC's
Chief Executive Officer or President, which
specifically identifies the manner in which such
person believes that you have not substantially
performed your duties, or (ii) the willful
engaging by you in illegal conduct which is
materially and demonstrably injurious to RTC. For
the purposes of this paragraph (d), no act, or
failure to act, on your part shall be construed as
"willful" unless done, or omitted to be done, by
you in bad faith and without reasonable belief
that your action or omission was in, or not
opposed to, the best interest of RTC.
e. "Good Reason" means (without your express written
consent)
i. the assignment to you of duties and
responsibilities materially diminished from
your duties and responsibilities with RTC as
the same existed immediately prior to a
Change in Control (except that you
understand that the mere facts that,
subsequent to a Change in Control, RTC
carries on its business as a subsidiary or
division of another company, and/or RTC's
Common Stock is no longer publicly traded,
are not, in and of themselves, sufficient to
constitute Good Reason due to a change in
duties); or
ii. a reduction by RTC in your base salary as in
effect immediately prior to a Change in
Control; or
iii. any failure by RTC to continue in effect any
benefit or incentive plan or arrangement in
which you are participating at the time of a
Change in Control (except that a replacement
plan or arrangement with at least
substantially similar terms may be provided
to you) unless that plan or arrangement
expires in accordance with its terms in
effect at the time of a Change in Control or
legal requirements; or
<PAGE>
<PAGE>6
iv. the taking of any action by RTC which would
adversely affect your participation in or
materially reduce your benefits under any
such plan or arrangement or deprive you of
any other material benefit (including any
miscellaneous benefit which is not
represented and protected by a written plan
document or a trust) enjoyed by you at the
time of a Change in Control; or
v. changing your job reporting location to a
site more than sixty (60) miles from your
job location immediately prior to the Change
in Control; or
vi. any material breach by RTC of any provision
of this Agreement; or
vii. any failure by RTC to comply with and
satisfy Paragraph 7(a).
f. "Voluntary Termination" means you voluntarily
terminate your current position with RTC for
reasons other than death, Retirement, Disability,
Cause or Good Reason. No termination during the
Window Period shall be considered a Voluntary
Termination.
g. "Window Period" means the 30-day period
immediately following the first anniversary of a
Change in Control.
4. Termination Following Change in Control
a. If a Change in Control shall occur while you are
still an active employee of RTC, you shall be
entitled to the compensation provided in Paragraph
5 upon the subsequent termination of your
employment with RTC by you or by RTC, unless such
termination is as a result of your:
i. death;
ii. Retirement (as defined in Paragraph 3(b)
hereof);
iii. Disability (as defined in Paragraph 3(c)
hereof);
<PAGE>
<PAGE>7
iv. termination by RTC for Cause (as defined in
Paragraph 3(d) hereof);
v. decision to terminate your employment other
than (i) for Good Reason (as defined in
Paragraph 3(e) hereof) or (ii) during the
Window Period (as defined in Paragraph 3(g)
hereof); or
vi. Voluntary Termination (as defined in
Paragraph 3(f) hereof).
b. Notice of Termination. Any termination by RTC
pursuant to Paragraph 4(a), shall be communicated
by delivery of a Notice of Termination. For the
purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which
shall indicate those specific termination
provisions in this Agreement relied upon and which
sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of your employment under the provision
so indicated.
5. Severance Compensation
a. If your employment with RTC shall terminate after
a Change in Control other than pursuant to
Paragraph 4(a)(i), (ii), (iii), (iv) or (vi), or
if you shall terminate your employment after a
Change in Control for Good Reason, or if you shall
terminate your employment during the Window Period
without any reason, then RTC shall:
i. continue to provide Health Care,
Extraordinary Medical Expense, Employee
Medical Reimbursement and Group Life
Insurance benefits to you of the same nature
and extent as are made available to retirees
of RTC pursuant to the RTC benefit plans in
existence immediately prior to a Change in
Control, except that such benefits shall
cease after three years; and
ii. pay to you as severance pay, in cash, an
amount, or amounts, the aggregate present
value of which shall equal three (3) times
the aggregate annual salary and bonus paid
to you by RTC, or any of its subsidiaries,
during the most recent expired calendar
year; provided, however, that such amount be
reduced by the present value (determined as
<PAGE>
<PAGE>8
provided in Section 280G(d)(4) of the
Internal Revenue Code of 1986 as amended
(the "Code")) of any other amount of
severance relating to salary or bonus
continuation to be received by you upon
termination of your employment under any
severance plan, policy or arrangement of RTC.
b. Pursuant to your election, any amount, or amounts,
which become payable to you pursuant to Paragraph
5(a)(ii) hereof shall be paid to you within five
business days of your date of termination.
All payments shall be net of any federal, state or
local income or employment taxes to which payments
of this type are customarily subject.
6. Certain Additional Payments by the Company.
a. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be
determined that any payment or distribution by RTC
to or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined
without regard to any additional payments required
under this Paragraph 6) (a "Payment") would be
subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are
incurred by you with respect to such excise tax
(such excise tax, together with any such interest
and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then you shall
be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after
payment by you of all taxes (including any
interest or penalties imposed with respect to such
taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
b. Subject to the provisions of Paragraph 6(c), all
determinations required to be made under this
Paragraph 6, including whether and when a Gross-Up
Payment is required and the amount of such
Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall
be made by the auditors for RTC for the fiscal
year in which the Change of Control occurs (the
<PAGE>
<PAGE>9
"Accounting Firm") who shall provide detailed
supporting calculations, together with a written
opinion with respect to the accuracy of such
calculations, both to RTC and you within 15
business days of the receipt of notice from you
that there has been a Payment or such earlier time
as is requested by RTC. In the event that the
Accounting Firm is serving (or has served within
the three years preceding the Change in Control)
as accountant or auditor for the individual,
entity or group effecting the Change of Control or
any affiliate thereof, you may appoint another
nationally recognized accounting firm to make the
determinations required hereunder (which
accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses
of the Accounting Firm shall be borne solely by
RTC. Any Gross-Up Payment, as determined pursuant
to this Paragraph 6, shall be paid by RTC to you
within five days of the receipt of the Accounting
Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by you,
it shall furnish you with a written opinion that
failure to report the Excise Tax on your
applicable federal income tax return would not
result in the imposition of a negligence or
similar penalty. Any determination by the
Accounting Firm shall be binding upon RTC and
you. As a result of the uncertainty in the
application of Section 4999 of the Code at the
time of the initial determination by the
Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by
RTC should have been made ("Underpayment"),
consistent with the calculations required to be
made hereunder. In the event that RTC exhausts
its remedies pursuant to Paragraph 6(c) and you
thereafter are required to make a payment of any
Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid
by RTC to or for your benefit.
c. You shall notify RTC in writing of any claim by
the Internal Revenue Service that, if successful,
would require the payment by RTC of the Gross-Up
Payment. Such notification shall be given as soon
as practicable but no later than ten business days
after you are informed in writing of such claim
and shall apprise RTC of the nature of such claim
and the date on which such claim in requested to
be paid. You shall not pay such claim prior to
the expiration of the 30-day period following the
<PAGE>
<PAGE>10
date on which you give such notice to RTC (or such
shorter period ending on the date that any payment
of taxes with respect to such claim is due). If
RTC notifies you in writing prior to the
expiration of such period that it desires to
contest such claim, you shall:
(i) give RTC any information reasonably
requested by RTC relating to such claim,
(ii) take such action in connection with
contesting such claim as RTC shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation with respect
to such claim by an attorney reasonably
selected by RTC,
(iii) cooperate with RTC in good faith in order
effectively to contest such claim, and
(iv) permit RTC to participate in any proceedings
relating to such claim;
provided, however, that RTC shall bear and pay
directly all costs and expenses (including
additional interest and penalties) incurred in
connection with such contest and shall indemnify
and hold you harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a
result of such representation and payment of costs
and expenses. Without limitation on the foregoing
provisions of this Paragraph 6(c), RTC shall
control all proceedings taken in connection with
such contest and, at its sole option, may pursue
or forgo any and all administrative appeals,
proceedings, hearings and conferences with the
taxing authority in respect of such claim and may,
at its sole option, either direct you to pay the
tax claimed and sue for a refund or contest the
claim in any permissible manner, and you agree to
prosecute such contest to a determination before
any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts
as RTC shall determine; provided, however, that if
RTC directs you to pay such claim and sue for a
refund, RTC shall advance the amount of such
payment to you, on an interest-free basis and
shall indemnify and hold you harmless, on an
after-tax basis from any Excise Tax or income tax
(including interest or penalties with respect
<PAGE>
<PAGE>11
thereto) imposed with respect to such advance or
with respect to any imputed income with respect to
such advance; and further provided that any
extension of the statute of limitations relating
to payment of taxes for your taxable year with
respect to which such contested amount is claimed
to be due is limited solely to such contested
amount. Furthermore, RTC's control of the contest
shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and
you shall be entitled to settle or contest, as the
case may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
d. If, after the receipt by you of an amount advanced
by RTC pursuant to Paragraph 6(c), you become
entitled to receive any refund with respect to
such claim, you shall (subject to RTC's complying
with the requirements of Paragraph 6(c)) promptly
pay to RTC the amount of such refund (together
with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt
by you of an amount advanced by RTC pursuant to
Paragraph 6(c), a determination is made that you
shall not be entitled to any refund with respect
to such claim and RTC does not notify you in
writing of its intent to contest such denial of
refund prior to the expiration of 30 days after
such determination, then such advance shall be
forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment
required to be paid.
7. Successor to RTC
a. RTC will require any successor or assign to all or
substantially all of the business and/or assets of
RTC, by agreement in form and substance
satisfactory to you, to assume and agree to
perform this Agreement in the same manner and to
the same extent that RTC would be required to
perform it if no such succession or assignment had
taken place. Any such assumption and agreement
must be express, absolute and unconditional. Any
failure of RTC to obtain such agreement at least 3
business days prior to the effective date of any
such succession or assignment shall be a material
breach of this Agreement and shall entitle you to
terminate your employment for Good Reason. As
used in this Agreement, "RTC" shall mean RTC as
<PAGE>
<PAGE>12
hereinbefore defined and any successor or assign
to its business and/or assets as aforesaid which
executes and delivers the agreement provided for
in this Paragraph 7 or which otherwise becomes
bound by all the terms and provisions of this
Agreement by operation of law.
b. This Agreement shall inure to the benefit of, and
be enforceable by, your personal and legal
representatives, executors, administrators,
successors, heirs, distributees, devisees and
legatees. If you should die while any amounts are
still payable to you hereunder, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to
your devisee, legatee, or other designee or, if
there is no such designee, to your estate.
8. Confidentiality and Non-Competition
You agree to retain in confidence any and all
confidential information known to you concerning RTC and
its business so long as such information is not otherwise
publicly disclosed. You agree that you will not engage
in any activity inimical to the interests of RTC within
three years of your termination.
9. Legal Fees and Expenses
RTC shall pay all reasonable legal fees and expenses
which you may incur as a result of (a) RTC's contesting
the validity or enforceability of this Agreement or (b)
your seeking to obtain or enforce any right or benefit
provided by this Agreement, unless a court deems your
action frivolous.
10. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights
a. You shall not be required to mitigate damages or
the amount of any payment provided for under this
Agreement by seeking other employment or
otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by
any compensation earned by you as the result of
employment by another employer after your
termination, or otherwise.
b. The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish
your existing rights, or rights which would accrue
<PAGE>
<PAGE>13
up to your termination date solely as a result of
the passage of time, under any employment
agreement or any RTC benefit or incentive plan or
arrangement, including, but not limited to, the
RTC Management Pension Plan.
11. Notice
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to RTC:
Rochester Telephone Corporation
180 South Clinton Avenue
Rochester, New York 14646
Attn: Chairman of the Committee on
Management
If to you:
NAME
Address
City, State Zip
or such other address as either party may have furnished
to the other in writing in accordance herewith, except
that notices of change of address shall be effective only
upon receipt.
12. Miscellaneous
No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or
discharge is agreed to in writing signed by you and RTC.
No waiver by either party hereto at any time of any
breach by the other party hereto of compliance with any
condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this
Agreement. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
New York.
<PAGE>
<PAGE>14
13. Validity
The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
14. Counterparts
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an
original but all of which together will constitute one
and the same instrument.
If this letter correctly sets forth our agreement on the
subject matter hereof, kindly sign and return to me the enclosed
copy of this letter which will then constitute our agreement on this
subject.
Sincerely,
ROCHESTER TELEPHONE CORPORATION
By: ------------------------------
Agreed to this day
of , 199 .
NAME
51ED
<PAGE>1
EXHIBIT 10.12
ROCHESTER TEL LETTERHEAD
December 23, 1993
Mr. F. R. Pestorius
3496P Sandy Beach Drive
Canandaigua, New York 14424
Dear Dutch:
This letter is to confirm our discussion concerning your
decision to retire; our agreement with respect to the terms and
conditions of your termination of employment; and our desire to
have you work for us until no later than July 1, 1994.
In consideration of $250,000 paid to you, payment of which is
made pursuant to paragraph 7 and which is hereby acknowledged
by you, we agree as follows:
1. Covenant Not to Compete - You agree that for a period
beginning with the effective date of this agreement and ending
five (5) years after your date of retirement, you shall not,
directly or indirectly, in any capacity, engage in or assist
another to engage in any work or activity in any way connected
with the development, manufacture or sale of any product or
service which in any way directly competes with any product or
service of Rochester Telephone in its markets or which in any
way directly competes with the pursuit of the strategic
direction of Rochester Telephone. Rochester Telephone as used
in this agreement includes the parent Rochester Telephone and
each of its subsidiaries.
2. Vacation - You are entitled to five (5) weeks of vacation
as of January 1, 1994 and twenty-five (25) days of banked
vacation. The cash equivalent of the unused vacation plus
banked vacation will be paid to you in a lump sum with respect
to the payroll period immediately following your last day of
actual employment. This vacation period will be added to the
last day of your actual employment to determine your last day
of active employment.
3. Pre-pension Leave and Executive Pre-pension Leave - Your
pension date will be the day after the Effective Date of
Retirement as hereinafter defined. A pre-pension leave amount
equal to four (4) months of your base salary of $179,000 will
be paid to you in semi-monthly installments over the four (4)
month period following your last day of active employment.
<PAGE>2
Immediately following the conclusion of these payments, you
will be paid an executive pre-pension leave amount equal to
eight (8) months of your base salary in a single lump sum
payment. The amounts you actually receive will be net of FICA,
federal and state taxes and other normal withholdings, as
applicable.
4. Short Term Bonus - A short term bonus for 1993 performance
which is expected to be approximately $125,000 will be paid to
you during January 1994 after completion of the necessary
approval process. The amount of the bonus will be based upon
results calculated for corporate vice presidents and modified
by the Regional Telephone Business Unit results. You will also
be paid a short term pro rata bonus for your months of 1994
performance through July 1, 1994, the amount of which will be
determined in the manner consistent with the 1994 method and
your current position.
5. Performance Unit Plan - You will be entitled to participate
fully in the 1991-1993 Performance Unit Plan. You will be
entitled to participate in the 1992-1994 and 1993-1995
Performance Unit Plans based upon the portion of the period
covered by each plan that ends with your last day of active
employment.
6. Stock Options - Your stock options granted prior to July 1,
1994 will be treated under the terms and conditions of the
Executive Stock Option Plan in effect as of July 1, 1994.
7. Payment Terms - You agree that the payment of the $250,000
is to be paid in six (6) installments as follows:
July 1, 1994 $ 50,000
January 1, 1995 100,000
January 1, 1996 50,000
January 1, 1997 25,000
January 1, 1998 15,000
January 1, 1999 10,000
In the event of a change in control as defined in the
Performance Unit Plan, all remaining payments hereunder shall
accelerate and be immediately payable in a lump sum.
8. Other Benefits - You will receive all full benefits for
which officers of Rochester Telephone are eligible during
vacation and for a period beginning at the Effective Date of
Retirement and continuing for six months, unless you accept a
position, either as an owner or an employee, with an entity
which provides medical and other benefits.
<PAGE>3
9. Other Perquisites - You will receive all the perquisites
(such as cellular service, club dues, automobile) for which
officers of Rochester Telephone are eligible during vacation
and for a period beginning at the Effective Date of Retirement
and continuing for six months, unless you accept a position,
either as an owner or an employee, with an entity, and in such
case, you will receive the cash equivalent for the remainder of
the period.
10. Rights to Benefits Unsecured - Your right and, if
applicable, the right of your estate to receive benefits under
the provisions of this Agreement shall be an unsecured claim
against the general assets of the Company. Any amounts that
the Company may set aside for paying benefits under this
Agreement are a part of the Company's general assets and, for
tax purposes, are reachable by the creditors of the Company.
11. Pension - Your pension payments will be as computed under
the Management Pension Plan, the Supplemental Management
Pension Plan, and the Supplemental Executive Retirement Plan.
Nothing in this letter modifies the terms of those Plans.
12. Assignability - Your right to receive benefits under this
Agreement are not transferable or assignable except by will or
by the laws of descent and distribution.
13. Governing Law - This Agreement shall be interpreted and
enforced in accordance with the laws of the State of New York.
14. Severability - The provision of this Agreement shall be
deemed severable and the invalidity or unenforceability of any
one or more of the provisions shall not affect the validity and
enforceability of the other provisions.
15. Non-Disclosure - Neither you nor the Company shall divulge
the contents of this Agreement to any person other than your
own legal and financial advisors without the express written
consent of the other, except pursuant to a valid court order.
16. Effective Date of Retirement. Effective Date of Retirement
as used elsewhere in this letter is defined to mean a mutually
agreed upon date in 1994 when an adequate replacement person
has been retained by the Company, but in no case later than
July 1, 1994 plus the allowed vacation and pre-pension leave.
17. Release - In consideration for the payments provided above,
except as provided in this Agreement, the Employee releases and
<PAGE>
<PAGE>4
discharges the Employer, its officers, agents, employees,
subsidiaries, and successors, from all claims of any kind,
which the Employee, or his agents, executors, heirs, or assigns
ever had or now have, whether known or unknown, up to and
including his termination of employment with the Employer.
This release includes, but is not limited to, the following:
any action or cause of action asserted or which could have been
asserted under the Age Discrimination in Employment Act of
1967, as amended, Title VII of the Civil Rights Act of 1964,
the New York Human Rights Law, the Employee Retirement Income
Security Act or the Americans with Disabilities Act; claims for
wrongful discharge, unjust dismissal, or constructive
discharge; claims for breach of any alleged oral, written or
implied contract of employment; claims for salary or severance
payments; claims for benefits; claims for attorneys fees; and
any other claims under any federal, state or local statute,
law, rule or regulation; provided that in any event all such
actions or claims relate to employment or benefits matters.
IN EXECUTING THIS AGREEMENT, YOU ACKNOWLEDGE THAT YOU HAVE
BEEN GIVEN AT LEAST 21 DAYS IN WHICH TO CONSIDER SIGNING THIS
AGREEMENT AND THE RELEASE CONTAINED IN THIS PARAGRAPH 15. YOU
ACKNOWLEDGE THAT YOU HAVE CONSULTED WITH AN ATTORNEY OF YOUR
CHOICE CONCERNING THIS AGREEMENT AND RELEASE. YOU HAVE
CAREFULLY READ AND FULLY UNDERSTOOD ALL THE PROVISIONS OF THIS
AGREEMENT AND RELEASE, AND ARE ENTERING INTO THIS AGREEMENT AND
RELEASE VOLUNTARILY. YOU ACKNOWLEDGE THAT THE CONSIDERATION
YOU ARE RECEIVING IN EXCHANGE FOR EXECUTING THIS AGREEMENT AND
RELEASE IS GREATER THAN THAT WHICH YOU WOULD BE ENTITLED TO IN
THE ABSENCE OF THIS AGREEMENT AND RELEASE. YOU HAVE NOT RELIED
UPON ANY REPRESENTATION OR STATEMENT, WRITTEN OR ORAL, NOT SET
FORTH IN THIS DOCUMENT. YOU ACKNOWLEDGE THAT THIS DOCUMENT
SETS FORTH THE ENTIRE AGREEMENT BETWEEN YOU AND THE EMPLOYER
AND THAT IT MAY NOT BE CHANGED ORALLY. YOU UNDERSTAND THAT YOU
HAVE THE RIGHT TO REVOKE THIS AGREEMENT WITHIN 7 DAYS OF
SIGNING IT, AND THAT THIS AGREEMENT SHALL NOT BECOME EFFECTIVE
OR ENFORCEABLE UNTIL THIS 7 DAY PERIOD HAS EXPIRED. YOU AGREE
THAT IF YOU EXERCISE YOUR RIGHT TO REVOKE THIS AGREEMENT WITHIN
7 DAYS, YOU WILL RETURN THE CONSIDERATION RECITED HEREIN TO THE
EMPLOYER.
If you agree with the terms of this Agreement, please signify
your consent by signing this letter in the place provided below
and returning it to me in the post paid envelope I have
provided. In consideration of your signing this Agreement, you
<PAGE>
<PAGE>5
will receive a payment in the amount of $50,000 on July 1,
1994, in accordance with the schedule in paragraph 7.
Very truly yours,
/s/ R. L. Bittner
Ronald L. Bittner
Chairman, President & CEO
I have reviewed this Agreement and agree with its terms and
conditions.
The effective date of this agreement is 12-28-93.
/s/ F. R. Pestorius
Date: December 21, 1993 ---------------------------------
F. R. Pestorius
52ED
<PAGE>1
EXHIBIT 10.31
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT PENSION PLAN
Amendment No. 17 to the January 1, 1987 Restatement
Pursuant to Article XI, Section 2.11 is amended, effective
January 1, 1994, by deleting the number $200,000 in the last
sentence thereof and substituting in its place $150,000.
IN WITNESS WHEREOF, the Employer has caused its duly
authorized officer to execute this Amendment on its behalf this
15th day of November, 1993.
ROCHESTER TELEPHONE CORPORATION
By: /s/ Josephine S. Trubek
-------------------------
Corporate Secretary
(53ED)
<PAGE>
<PAGE>2
EXHIBIT 10.31
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT PENSION PLAN
Amendment No. 18 to the January 1, 1987 Restatement
Pursuant to Article XI, the Plan is amended, effective
January 1, 1994, as follows:
1. Section 3.1 is amended by deleting the second
paragraph thereof and substituting in its place the following:
Notwithstanding the above, this Plan does not cover
any Employee who (1) is in a unit of employees covered
by a collective bargaining agreement unless such
agreement provides for the application of this Plan to
the employees in such unit, (2) is not in a collective
bargaining unit but is in a non-exempt hourly status,
(3) is a temporary employee, or (4) is a Leased
Employee.
2. Section 4.1 is amended by adding to the end of
the first paragraph thereof the following new sentence:
The five year average compensation factor used in (1)
above shall be the higher of the average obtained
using calendar years of service or the average
obtained using 12-consecutive-month years of service
ending on a Participant's date of retirement or any
anniversary thereof.
3. Section 4.3 is amended by adding to the end
thereof the following new subsection (c):
(c) TRANSFERS FROM UPSTATE PARTNERS. A
Participant may elect to transfer his accrued benefit
from the Upstate Partners Pension Plan to this Plan in
accordance with the terms of the Upstate plan. In
this event, the Participant shall be credited for all
purposes under this Plan with all service and
compensation he has with both the Employer and, to the
extent taken into account in determining his accrued
benefit, the Upstate Partners. The Participant's
Accrued Benefit shall be determined under the terms of
this Plan taking into account such aggregate service
and compensation provided that in no event shall the
Accrued Benefit be less than the aggregate of the
accrued benefit transferred from the Upstate Partners
<PAGE>
<PAGE>3
Pension Plan plus the Accrued Benefit under the Plan,
if any, immediately preceding the transfer of the
accrued benefit from the Upstate Partners Pension Plan
to this Plan.
4. Section 5.12 is amended by deleting the first
sentence thereof and substituting in its place the following:
Neither an eligible Employee under Section 3.1 who
continues working beyond Normal Retirement Age nor an
eligible Employee under Section 3.1 who has commenced
receiving Plan benefits and is subsequently
re-employed by the Employer shall be entitled to
receive benefits from this Plan during his period of
employment with the Employer.
5. Article V is amended by adding to the end thereof
the following new Section 5.18:
Enhanced SECTION 5.18 (a) ELIGIBLE PARTICIPANTS. This
Retire- Section 5.18 provides enhanced benefits for
ment Participants who are in the active employ of the
Option Employer, on January 3, 1994, including Participants
on vacation, and who, without application of the terms
of this Section, have at least five Years of Service
on this date. Notwithstanding the foregoing, this
Section does not cover persons who on January 3, 1994
are on pre-pension leave or who are executive officers
of the Employer.
(b) INCREASE IN ACCRUED BENEFIT. Each eligible
Participant's Accrued Benefit determined as of January
3, 1994 shall be calculated by adding five years to
the Participant's actual age on such date and by
adding five Years of Service to the Participant's
actual Years of Service on such date. Notwithstanding
the above, an eligible Participant whose last day of
work is on or before March 31, 1994 shall have the
additional five Years of Service added to his actual
Years of Service determined as of his or her
retirement date. All other factors used in computing
a Participant's Accrued Benefit on January 3, 1994
shall be those actually in effect on this date. Any
Participant who becomes entitled to receive a benefit
from the Plan on and after January 3, 1994, shall
receive the higher of his or her Accrued Benefit
determined under this Section as of such date or the
benefit calculated under other applicable Plan
provisions using relevant factors on the determination
date without the addition of the five years of age and
service provided for in this Section.
<PAGE>
<PAGE>4
(c) INCREASE IN AGE AND SERVICE FOR BENEFIT
ENTITLEMENT PURPOSES. As of January 3, 1994, each
eligible Participant shall have five years added to
his or her actual age on such date and five years to
his or her actual Years of Service on such date for
purposes of determining eligibility to receive a
normal or an early retirement service pension under
Sections 5.1, 5.2 or 5.3 of the Plan. In determining
whether a Participant has the requisite age or service
to retire on and after January 3, 1994, an eligible
Participant shall be considered to have the higher of
his or her age and service as determined under this
provision on January 3, 1994 or his or her actual age
and service on the date the determination is made.
(d) IMPACT ON VESTING. Service credit granted
under this Section 5.18 shall not be taken into
account for determining the portion of a Participant's
benefit that is vested.
IN WITNESS WHEREOF, the Employer has caused its duly
authorized officer to execute this Amendment on its behalf this
10th day of February, 1994.
ROCHESTER TELEPHONE CORPORATION
By: /s/ Josephine S. Trubek
-------------------------
Josephine S. Trubek
Corporate Secretary
(53ED)
<PAGE>
EXHIBIT 10.33
ROCHESTER TELEPHONE CORPORATION
SUPPLEMENTAL MANAGEMENT PENSION PLAN
Amendment No. 6 to September 1, 1989 Restatement
Pursuant to Article Six, the Plan is amended as follows:
1. Section 3.1 is amended, effective for benefits payable
on and after November 1, 1993, by deleting the last paragraph
thereof and substituting in its place the following:
An otherwise eligible Employee who, without the
consent of the Board, engages in any activity inimical to
the interests of any Participating Company within three
years (five years in the case of an executive officer of
the Company) of retirement shall cease being eligible to
receive any further benefits after commencing such
activity, provided that upon a Change in Control this
sentence shall have no effect. For purposes of the
foregoing, the term "inimical" shall include but not be
limited to the following activities: engaging directly or
indirectly in the performance of services for any
telecommunications business or any other business concern
that offers services or products which compete with those
offered by any company within the Rochester Tel Group of
companies or with Upstate Partners (collectively referred
to below as "Rochester Tel"), making disparaging remarks
publicly about Rochester Tel, disclosing confidential
business information concerning Rochester Tel, soliciting
any person to leave the employ of Rochester Tel, engaging
in any activity of a nature similar to the foregoing
activities or engaging in any other activity that the
Committee may from time to time determine in its sole
discretion to be inimical to the interests of Rochester
Tel.
2. Section 4.1(c) is amended, effective January 1, 1993,
by deleting the present provision in its entirety and
substituting in its place the following:
(c) if in the discretion of the Committee, upon the
recommendation of the Chief Executive Officer, the
factors so warrant, the service factor shall take into
account the eligible Employee's service with any prior
employer, provided that after a Change in Control the
Committee may not change a prior decision to allow an
eligible Employee's service factor to take into
account service with another company;
<PAGE>
<PAGE>2
3. Article Four is amended, effective January 1, 1993, by
adding to the end thereof the following new Section 4.8:
4.8 If the amount of a death benefit payable under
Section 7.4 of the Funded Plan is limited because
of the compensation cap imposed by Code Section
401(a)(17) or because of any other Code
limitation on the Funded Plan's death benefits
there shall be payable under this Plan the
difference between the benefit payable under
Section 7.4 of the Funded Plan without regard to
any Code-imposed limits and the amount of the
death benefit actually payable by the Funded
Plan. Except for the amount, the payment of the
benefit under this Section 4.8 shall conform to
the terms and conditions of Section 7.4 of the
Funded Plan.
4. Article Six is amended, effective November 1, 1993, by
adding to the end thereof the following new Section 6.3:
6.3 The terms of this Plan cannot be amended, waived
or otherwise modified by any other plan, contract
or agreement that addresses an employee's or
former employee's terms and conditions of
employment or the termination of such employment.
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Amendment on its behalf this
15th day of November, 1993.
ROCHESTER TELEPHONE CORPORATION
By: /s/ Josephine S. Trubek
--------------------------
Corporate Secretary
(54ED)
<PAGE>
EXHIBIT 10.35
ROCHESTER TEL GROUP
EMPLOYEES' RETIREMENT SAVINGS PLAN
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION 1
ARTICLE I - Definitions 2
ARTICLE II - Eligibility 8
ARTICLE III - Participation and Participant
Contributions 9
ARTICLE IV - Participating Company Contributions 13
ARTICLE V - Investment of Contributions 18
ARTICLE VI - Participant Accounts 20
ARTICLE VII - Retirement or Other Termination
of Employment 23
ARTICLE VIII - Death 25
ARTICLE IX - Payment of Benefits 26
ARTICLE X - Withdrawals and Loans During
Employment 30
ARTICLE XI - Plan Admininistration 35
ARTICLE XII - Amendment and Termination 39
ARTICLE XIII - Top-Heavy Provisions 40
ARTICLE XIV - General Provisions 43
Appendix A - Participating Companies
Appendix B - Plan Features Unique to Participating
Companies
<PAGE>
<PAGE> 1
INTRODUCTION
This Employees' Retirement Savings Plan is hereby
established, effective as of March 1, 1994 by the merger of the
following plans within the Rochester Tel Group of companies
into MISP/MOST: Retirement Savings Plan for Affiliated
Companies, Telco Subsidiaries' 401(k) Plan, Vista Management
Retirement Savings Plan, RCI Long Distance New England, Inc.
Profit Sharing 401(k) Plan, Thorntown 401(k) Plan, Mid Atlantic
Telecom, Inc. Employees' 401(k) Plan and the Seneca-Gorham
Savings Plan. It is anticipated that in the future other
401(k) and savings plans within the Rochester Tel Group will be
merged into this Plan. All Participants in this Plan are
subject to identical terms and conditions of participation
except as set forth in Appendix B, with respect to each
Participating Company.
The merger of any plan into this Plan shall not reduce
any Participant's accrued benefit in effect immediately
preceding the merger.
This Plan is intended to qualify as a profit sharing
plan pursuant to the provisions of Code sections 401(a) and
401(k).
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ARTICLE I
Definitions
1.1 "Affiliated Company" means Rochester Telephone
Corporation (the "Company") and
(a) any other company which is included within a
"controlled group of corporations" within which
the Company is also included, as determined under
section l563 of the Code without regard to
subsections (a)(4) and (e)(3)(C) of said
section l563; or
(b) any other trades or businesses (whether or not
incorporated) with which the Company is
affiliated which, based on principles similar to
those defining a "controlled group of
corporations" for the purposes of (a) above, are
under common control; or
(c) any other entities required to be aggregated with
the Company pursuant to Code section 414.
1.2 "Basic Contributions" means a Participant's
contributions to the Plan in any whole percentage of
Compensation up to a 6 percent of Compensation maximum
in accordance with Section 3.2 and, where applicable,
Appendix B.
1.3 "Beneficiary" means the Participant's surviving spouse
or, in the event there is no surviving spouse or the
surviving spouse elects in writing not to receive any
death benefits under the Plan, the person or persons
(including a trust) designated by a Participant to
receive any death benefit which shall be payable under
this Plan.
1.4 "Board" means the Board of Directors of the Company or
any committee of the Board of Directors authorized to
act on behalf of the Board. Any such Board committee
shall be composed of at least three members of the
Board of Directors. As used in this Plan the term
"Board-appointed committee" means the Committee and
any other committee appointed by the Board which need
not be comprised of at least three Board members but
may include or consist entirely of management
personnel who are not members of the Board.
1.5 "Code" means the Internal Revenue Code of 1986, as
amended.
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<PAGE> 3
1.6 "Committee" means the Employees' Benefit Committee
appointed pursuant to Article XI to administer the
Plan.
1.7 "Company" means Rochester Telephone Corporation, a New
York corporation, its predecessor or its successor.
1.8 "Company Discretionary Contributions" means the
contributions of a Participating Company that are not
contingent on the level of Participant contributions
and are specified, if any, in Appendix B for each
Participating Company.
1.9 "Company Matching Contributions" means the
contributions of a Participating Company that are
contingent upon a Participant's Basic Contributions in
an amount specified for the Participating Company in
Appendix B.
1.10 "Company Stock" means Rochester Telephone Corporation
common stock.
1.11 "Compensation" means the total of a Participant's
basic salary or wages, bonuses and commissions paid by
a Participating Company for services actually rendered
by the Participant to a Participating Company. A
Participant's Compensation shall not include overtime,
pension payments or any other form of extra
remuneration of whatever nature except bonuses and
commissions included under the preceding sentence, nor
any annual remuneration in excess of $150,000
(adjusted for cost of living increases as permitted
under the Code). For any Participant receiving
disability pay from a Participating Company during a
payroll period (other than a disability pension), the
term "Compensation" means such disability pay. For
any Employee who is making Pre-Tax Contributions
pursuant to Section 3.7, or pre-tax contributions
under a Participating Company's cafeteria (section
125) plan, the term Compensation shall be based on his
wages, salary, commissions and bonuses, all as defined
above, prior to any salary reduction.
1.12 "Early Retirement Age" means age 55.
1.13 "Effective Date" means January 1, 1994, provided that
provisions having other effective dates shall be
effective as may be expressly provided by such
provisions.
1.14 "Election Period" means the period of time during
which a Participant can elect, with the consent of his
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<PAGE> 4
spouse, to waive the Qualified Joint and Survivor
Annuity or the Qualified Pre-Retirement Survivor
Annuity or can elect to revoke such a waiver. In the
case of a Qualified Joint and Survivor Annuity, the
Election Period is the 90 day period preceding the
annuity starting date. In the case of a Qualified
Pre-Retirement Survivor Annuity, the Election Period
begins on the first day of the Plan Year in which a
Participant attains age 35 and ends on the date of the
Participant's death, provided that if a Participant
terminates employment prior to age 35, his Election
Period shall begin on his termination date.
1.15 "Employee" means any individual who is employed by a
Participating Company.
1.16 "ERISA" means the Employee Retirement Income Security
Act of l974, as amended from time to time, and any
regulations issued pursuant thereto.
1.17 "Forfeiture" means that portion of a Participant's
Restricted Company Contribution Account which is
forfeited before full vesting.
1.18 "Highly Compensated Employee" means an Employee who is
highly compensated as defined in Code section 414(q).
Subject to the special limitations and definitions
contained in section 414(q), a Highly Compensated
Employee is any Employee who during the current or
preceding Plan Year:
(a) was a five percent owner of a Participating
Company;
(b) received compensation from a Participating
Company in excess of $75,000;
(c) received compensation from a Participating
Company in excess of $50,000 and is in the top 20
percent of the Participating Company's employees
ranked on the basis of compensation; or
(d) was at any time an officer of a Participating
Company and received compensation in excess of
50% of the defined benefit dollar limitation for
the Plan Year under Code section 415(b)(1)(A).
In making this determination, an employee who does not
satisfy (b), (c) or (d) in the preceding Plan Year
shall not be considered as satisfying (b), (c) or (d)
for the current Plan Year unless he meets the
requirements of those subsections for the current year
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<PAGE> 5
and is among the top 100 employees paid the greatest
compensation during the current Plan Year. For
purposes of the Highly Compensated Employee
definition, the term Participating Company includes
any Affiliated Company whether or not such Affiliated
Company has adopted this Plan. This Section's dollar
amounts shall be adjusted for cost of living increases
as provided under the Code.
1.19 "Investment Manager" means any individual or
corporation selected by the Board or by any
Board-appointed committee having the authority to
select such person who (i) is registered as an
investment adviser under the Investment Advisers Act
of 1940; or (ii) is a bank, as defined in that Act; or
(iii) is an insurance company qualified to manage,
acquire or dispose of plan assets under the laws of
more than one state and each individual or corporation
acknowledges in writing that he or the corporation, as
the case may be, is a fiduciary with respect to the
Plan.
1.20 "Leased Employee" means any person who is not
otherwise an Employee and who, pursuant to an
agreement between a Participating Company and any
other person or organization, has performed services
for the Participating Company, or for the
Participating Company and related persons (determined
in accordance with section 414(n)(6) of the Code), on
a basis whereby if such person were an Employee, such
person would have become an eligible Employee
hereunder either in the initial eligibility
computation period or any Plan Year thereafter, and
such services are of a type historically performed by
employees in the business field of the Participating
Company, provided, that a person shall not be treated
as a Leased Employee for any Plan Year if, during such
Plan Year: (i) such person is covered by a money
purchase pension plan described in section
414(n)(5)(B) of the Code, and (ii) not more than 20%
of the Employees who are not Highly Compensated
Employees are Leased Employees. Once a person is
classified as a Leased Employee, such person shall
remain a Leased Employee for every Plan Year for which
the person completes at least 1000 Hours of Service.
1.21 "Non-Highly Compensated Employee" means an Employee
who is not a Highly Compensated Employee.
1.22 "Normal Retirement Age" means age 65.
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<PAGE> 6
1.23 "Participant" means an Employee who meets the
eligibility requirements set forth in Section 2.l and
who elects to participate in the Plan.
1.24 "Participant Account" means, as of any Valuation Date,
the then amount of a Participant's contributions and
the Participating Company's contributions allocated on
behalf of the Participant adjusted to reflect any
investment earnings and losses attributable to such
contributions, withdrawals and distributions, at the
then market value of the Trust. Where appropriate a
Participant Account shall have the following
subaccounts: a Restricted Company Contribution
Account to record Company Matching and Discretionary
Contributions, a Participant Pre-Tax Contribution
Account to record Pre-Tax Contributions, a Participant
Post-Tax Contribution Account to record Post-Tax
Contributions and a Rollover Account to record
rollover contributions. Earnings associated with each
type of contribution shall be allocated to the account
to which the associated contributions are allocated.
1.25 "Participating Company" means the Company and each
Affiliated Company that has adopted this Plan for the
benefit of its eligible Employees. Participating
Companies are listed in Appendix A.
1.26 "Plan" means this Rochester Tel Group Employees'
Retirement Savings Plan as set forth herein and as it
may be amended from time to time.
1.27 "Plan Year" means the calendar year. The Plan Year
shall be the limitation year as this term is used in
ERISA.
1.28 "Post-Tax Contributions" means a Participant's
contributions which are non-deductible for income tax
purposes at the time they are made.
1.29 "Predecessor Company" means any organization which was
acquired by the Company or an Affiliated Company.
1.30 "Pre-Tax Contributions" means a Participant's
contributions which are not included in his income for
income tax purposes at the time they are made.
1.31 "Qualified Joint and Survivor Annuity" means an
annuity for the life of the Participant with a
survivor annuity for the life of the Participant's
spouse which is 50 percent of the amount which is
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<PAGE> 7
payable during the joint lives of the Participant and
the Participant's spouse and which is purchased from
an insurance company with the Participant's account
balance.
1.32 "Qualified Pre-Retirement Survivor Annuity" means a
life annuity payable to the surviving spouse of a
deceased Participant which is purchased from an
insurance company with the Participant's account
balance.
1.33 "Restricted Stock" means Company Stock that has been
allocated to a Participant's Restricted Company
Contribution Account for a period of less than five
years from the date of the initial allocation.
1.34 "Supplemental Contributions" means a Participant's
contributions to the Plan in excess of his Basic
Contributions in accordance with Section 3.2.
1.35 "Trust" or "Trust Fund" means the amounts held in
trust in accordance with this Plan and consists of
such investment options as from time to time may be
designated by a Board-appointed Committee.
1.36 "Trust Agreement" means any agreement entered into
between the Company and any Trustee to carry out the
purposes of the Plan, which agreement shall constitute
a part of this Plan.
1.37 "Trustee" means any bank or trust company selected by
the Board or a Board committee to serve as Trustee
pursuant to the provisions of the Trust Agreement.
1.38 "Valuation Date" means the last day the Trust may have
been valued provided that the Trust shall be valued no
less frequently than on the last day of each calendar
quarter.
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<PAGE> 8
ARTICLE II
Eligibility
2.1 Eligibility Requirements. An Employee who fits within
the eligible class set forth in Appendix B for his
Participating Company and who is not excluded pursuant
to the following sentence is eligible to become a
Participant on his employment date with the
Participating Company. An Employee is not eligible to
participate in this Plan if (1) the Employee is in a
unit of employees covered by a collective bargaining
agreement in which retirement benefits were the
subject of good faith bargaining unless such
collective bargaining agreement expressly provides for
participation in this Plan; (2) the Employee is a
temporary or summer employee; or (3) the Employee is a
Leased Employee.
In the discretion of the Committee, an eligible
Employee of a Participating Company that has adopted
this Plan who is transferred to an Affiliated Company
that has not adopted this Plan may participate in the
Plan under such arrangements as the Committee may
prescribe.
2.2 Reemployment. If an Employee terminates employment
and is subsequently reemployed by a Participating
Company, he will be eligible to begin participation in
this Plan immediately upon his return to employment.
All service of such an Employee with a Participating
Company or any Affiliated Company prior to termination
of employment shall be credited to such Employee for
purposes of the vesting provisions of Section 7.2.
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<PAGE> 9
ARTICLE III
Participation and Participant Contributions
3.1 Participation. An eligible Employee may become a
Participant by filing a written application with the
Committee. The application shall indicate the amount
of his initial Basic and Supplemental Contributions
and whether he intends to have such Contributions made
as Post-Tax Contributions or as Pre-Tax
Contributions. Except as the Committee in its
discretion may otherwise determine, participation will
commence with the first payroll period as is
administratively practicable to meet following the
date such written election is received by the
Committee. Participation shall thereafter continue
until all amounts in the Participant's Account have
been distributed even though current contributions may
be suspended.
3.2 Amount of Contributions. Contributions may be made by
any Participant who has enough Compensation during any
payroll period to make a contribution by payroll
deduction. Each Participant may contribute, at his
option, Basic Contributions in any whole percentage of
his Compensation during a payroll period with a
minimum contribution of 1 percent of Compensation and
a maximum contribution of 6 percent of Compensation.
If a Participant is making Basic Contributions at the
maximum rate of 6 percent of his Compensation, he may
also elect to make Supplemental Contributions of any
whole percentage of from l to l0 percent of his
Compensation during a payroll period. All Participant
contributions will be in cash in the form of
Employee-authorized payroll deductions on either a
post-tax basis or, pursuant to Section 3.7, on a pre-
tax basis.
3.3 Change in Amount of Contributions. The percentage, or
percentages if more than one, of Compensation
designated by the Participant as his contribution rate
will continue in effect, notwithstanding any change in
his Compensation, until he elects to change such
percentage. A Participant, by filing a written
election form furnished by the Committee, may change
his percentage of contributions as frequently during
the Plan Year and pursuant to such rules as the
Committee may prescribe. Any such change will become
effective on the first payroll period as is
administratively practicable to meet after the date
such written election is received by the Committee.
If a Participant's total contribution rate is in
excess of 6 percent of his Compensation, any such
change will first be applied to adjust the amount of
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<PAGE> 10
his Supplemental Contributions and then, if necessary,
to adjust the amount of his Basic Contributions. If a
Participant's total contribution rate is less than
6 percent of his Compensation, any such change will
first be applied to adjust the amount of his Basic
Contributions and then, if necessary, to provide for
Supplemental Contributions.
3.4 Suspension of Participant Contributions. A
Participant, by filing a written election with the
Committee, may elect to suspend either his Basic or
Supplemental Contributions, or both, at any time. Any
such suspension will become effective with the first
payroll period as is administratively practicable to
meet after the date such written election is received
by the Committee. A suspension of all Basic
Contributions will automatically suspend all
Supplemental Contributions. In order to resume making
contributions, the Participant must follow the
procedure outlined in Section 3.l as though he were a
new Participant. A Participant will not be permitted
to make up suspended contributions. Participant
contributions will be suspended automatically for any
payroll period in which the Participant is not in
receipt of Compensation. Such automatic suspension
shall be lifted beginning with the next payroll period
that the Participant receives Compensation. The
suspension of Supplemental Contributions, in the
absence of an election to the contrary, will not
affect Basic Contributions.
3.5 Remittance of Participant Contributions to the
Trustee. Participant contributions will be remitted
as soon as administratively practicable to the Trustee.
3.6 Termination of Participant Contributions. A
Participant's contributions will terminate effective
with the payroll period that ends or includes the date
the Participant terminates employment for any reason,
including retirement or death.
3.7 Pre-Tax Contributions Option. A Participant shall
have the option of having his Basic and Supplemental
Contributions to the Plan made on a tax-deferred basis
pursuant to the terms of this Section. Basic and
Supplemental Pre-Tax Contributions may be made solely
pursuant to a salary reduction agreement between an
individual Participant and his employer. Under this
agreement the Participant agrees to reduce his
Compensation by a specified percentage (as outlined in
Section 3.2) and the Participating Company agrees to
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<PAGE> 11
contribute to the Plan the identical amount on behalf
of the Participant. The agreement shall be in such
form and subject to such rules as the Committee may
prescribe. The Committee, in its sole discretion, may
limit the number of salary reduction agreements a
Participant may make during a Plan Year, except that
an agreement may be terminated at any time, in which
event the Participant shall specify whether all of his
contributions shall cease or continue to be made as
Post-Tax Contributions.
3.8 Lump Sum Contributions. Notwithstanding the foregoing
provisions, in accordance with such rules as the
Committee may prescribe on a non-discriminatory basis,
a Participant may make lump sum Post-Tax or Pre-Tax
Contributions at such times and in accordance with
such rules as the Committee may prescribe. Such lump
sum contributions may be made in addition to or as an
alternative to any salary deduction contributions made
pursuant to other provisions of this Plan. A lump sum
Post-Tax Contribution may be made by any method
approved by the Committee, including payroll deduction
or direct contribution. A lump sum Pre-Tax
Contribution can be made only pursuant to a salary
reduction agreement between the Participant and a
Participating Company. A Participant may make such
lump sum contributions in any dollar amount or in any
percentage of Compensation that the Participant may
designate, provided that (1) all such contributions
are subject to the ERISA limitations set forth in
Section 4.4 of the Plan; and (2) a lump sum Pre-Tax
Contribution cannot exceed the Participant's
Compensation for the period covered by the salary
reduction agreement.
3.9 Rollovers to This Plan. Notwithstanding the
limitations on contributions set forth in the
preceding Sections of this Article III, a Participant
may make rollover contributions (as defined in
sections 402(c)(4), 403(a)(4) and 408(d)(3) of the
Code) to the extent the Committee in its discretion
may permit and in accordance with rules it shall
establish. In addition, the Committee in its sole
discretion may arrange for a Participant's account in
any other tax- qualified plan to be transferred
directly to this Plan. No rollover contribution or
transfer shall be permitted if it could adversely
affect the tax qualification of this Plan. All
rollovers and transfers to this Plan shall be credited
to a Participant's Rollover Account.
3.10 Direct Rollovers from this Plan. Notwithstanding any
provision of the Plan to the contrary that would
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<PAGE> 12
otherwise limit a Participant's election under this
Section, a Participant may elect, at the time and in
the manner prescribed by the Committee, to have any
portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by
the Participant in a direct rollover. An eligible
rollover distribution is any distribution of all or
any portion of the balance to the credit of the
Participant except that an eligible rollover
distribution does not include any distribution that is
one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the Participant or
the joint lives (or joint life expectancies) of the
Participant and the Participant's designated
Beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution
is required under section 401(a)(9) of the Code; and
the portion of any distribution that is not includible
in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect
to Company securities).
An eligible retirement plan is an individual
retirement account described in section 408(a) of the
Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described
in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts
the Participant's eligible rollover distribution.
However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or
individual retirement annuity.
For these purposes, a Participant includes an Employee
or former Employee who has an account balance in the
Plan. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations
order, as defined in section 414(p) of the Code, are
Participants with respect the interest of the spouse
or former spouse. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the Participant.
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ARTICLE IV
Participating Company Contributions
4.1 Company Contributions. Subject to the limitations of
Section 4.4, each Participating Company will
contribute Company Matching Contributions, or Company
Discretionary Contributions, or both, as specified in
Appendix B for such Participating Company. All
Participating Company contributions will be made in
cash which shall be used by the Trustee to purchase
Company Stock as soon as reasonably practicable.
4.2 Remittance of Company Contributions. Company Matching
Contributions shall be remitted to the Trustee on a
regular and periodic basis following the payroll
period to which they relate but in no event shall they
be made less frequently than quarterly. Company
Discretionary Contributions for a Plan Year shall be
remitted to the Trustee by a Participating Company no
later than the date the Participating Company's tax
return is due for the year within which ends the Plan
Year to which the contributions relate.
4.3 Effect of Suspension of Participant Contributions on
Company Contributions. During any period in which a
Participant's Basic Contributions are suspended,
Company Matching Contributions on his behalf will also
be suspended.
4.4 Maximum Contributions. Notwithstanding the
contribution levels specified in Article III and the
preceding Sections of this Article IV, no
contributions will be permitted in excess of the
limits set forth below:
1. Limits on Employee Pre-Tax Contributions. A
Participant's Pre-Tax Contributions to this Plan and
any tax-deferred contributions under any other 401(k)
plan in which he may participate shall not exceed
$8,994 (adjusted for cost of living increases for
years after 1993 as provided under the Code) in any
taxable year of the Participant. To meet this limit,
no contribution to this Plan in excess of $8,994 (as
adjusted) shall be accepted on behalf of any
Participant during a calendar year. If a Participant
participates in more than one plan, he shall notify
the Committee of any excess contribution in a calendar
year by March 1 of the following year. The Committee
shall then cause the portion of such excess allocated
to this Plan to be returned to the Participant by
April 15 following the calendar year to which the
excess contribution relates.
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<PAGE> 14
In addition to the individual limits, the Plan's
contributions shall, if necessary, also be limited so
as to meet one of the following tests:
(a) For each Plan Year, the actual deferral
percentage for the Highly Compensated Employees
may not be more than the actual deferral
percentage for the Non-Highly Compensated
Employees multiplied by 1.25; or
(b) For each Plan Year, the excess of the actual
deferral percentage for the Highly Compensated
Employees over the actual deferral percentage for
the Non-Highly Compensated Employees may not be
more than two percentage points and the actual
deferral percentage for the Highly Compensated
Employees may not be more than the actual
deferral percentage for the Non-Highly
Compensated Employees multiplied by 2.0.
In applying these tests, the actual deferral
percentages for the Highly Compensated Employees and
the Non-Highly Compensated Employees for a Plan Year
shall be the average of the percentages, calculated
separately for each eligible Employee in the group,
obtained by dividing the sum of the Employee's Pre-Tax
Contributions by the Employee's compensation (as
required under Code section 414(s)) for the Plan Year.
The Committee shall have the responsibility for
monitoring compliance with these tests and shall have
the power to take any steps it deems appropriate to
ensure compliance, including limiting the amount of
salary reduction permitted by the Highly Compensated
Employees or requiring that the contributions for the
Highly Compensated Employees be delayed or held in
escrow before being paid over to the Trustee until
such time as the Committee determines that
contributions can be made on behalf of the Highly
Compensated Employees without violating the
requirements of Code section 401(k). Within two and
one-half months (otherwise within 12 months) following
the end of a Plan Year the Committee shall distribute
to Highly Compensated Employees such contributions
(and earnings thereon) as may be in excess of the
amounts required to satisfy the special
nondiscrimination tests.
2. Limits on Employee Post-Tax Contributions and
Company Matching Contributions. Pursuant to Internal
Revenue Code section 401(m) the combination of
Employee Post-Tax Contributions and Company Matching
Contributions shall, if necessary, be limited so as to
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<PAGE> 15
ensure that in each Plan Year the actual contribution
percentage for eligible Highly Compensated Employees
does not exceed the greater of:
(a) 125 percent of the contribution percentage of all
eligible Non-Highly Compensated Employees; or
(b) the lesser of twice the contribution percentage
of eligible Non-Highly Compensated Employees or
the contribution percentage of eligible
Non-Highly Compensated Employees plus two
percentage points.
In applying these tests, the contribution percentages
for Highly Compensated Employees and Non-Highly
Compensated Employees for a Plan Year shall be the
average of the percentages for each group, calculated
separately for each employee in each group, obtained
by dividing the sum of a Participant's Post-Tax
Contributions and the Company Matching Contributions
on his behalf by the Participant's compensation (as
required by Code section 414(s)) for the Plan Year.
At the election of the Committee, the contribution
percentages can be determined by also taking into
account a Participant's Pre-Tax Contributions.
If the foregoing test is not satisfied for any Plan
Year, the Committee shall direct the excess aggregate
contributions which cause the failure to be
distributed to the Highly Compensated Employees. Such
distributions shall be made in accordance with the
provisions of Code section 401(m) prior to the end of
the Plan Year following the Plan Year in which
occurred the failure to satisfy the test.
3. Code Section 415 Limits. Pursuant to Code section
415, the total of the Employee and Participating
Company contributions on behalf of a Participant for
each Plan Year (his "annual additions") shall not
exceed the lesser of $30,000 (or such larger amounts
as reflect cost of living increases pursuant to
section 415 of the Code) or 25 percent of the
Participant's total compensation for such Plan Year.
For purposes of this Section, the term "annual
additions" means the total each Plan Year of a
Participating Company's contributions, the Employee's
contributions and Forfeitures. Rollover contributions
and loan repayments are not annual additions for this
purpose. For purposes of applying these limitations,
the term "compensation" shall have the meaning
ascribed to it in regulations under Code section 415.
In general, these regulations define compensation to
mean an Employee's W-2 compensation from a
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<PAGE> 16
Participating Company but excluding income derived
from the exercise of stock options, from the
disqualification of an incentive stock option, from
restricted stock or from income imputed from the
payment of life insurance premiums.
In addition to the amounts calculated under this Plan,
annual additions shall include such amounts, similarly
calculated, that are contributed with respect to the
Participant to any other defined contribution plan
maintained by a Participating Company or by any
Affiliated Company and Participating Company
contributions to an individual medical account as
described in Code sections 415(1) and 419A(d)(2). In
determining whether a corporation is an Affiliated
Company for this purpose only, the percentage control
test set forth in section 1563(a) of the Code shall be
a 50 percent test in place of the 80 percent test each
place the 80 percent test appears in said Code section.
If Plan contributions exceed the limits of this
Section, first the Participant's contributions shall
be reduced, as necessary, to eliminate the excess, in
the following order of priority: Post-Tax
Supplemental Contributions; Post-Tax Basic
Contributions; Pre-Tax Supplemental Contributions; and
Pre-Tax Basic Contributions. Post-Tax and Pre-Tax
Contributions which cause the excess, plus the
earnings attributable to the contributions may be
returned to the Participant in the event the excess is
caused by a reasonable error in estimating a
Participant's annual compensation or any other cause
which is acceptable under Treasury Regulation section
1.415-6(b)(6). Any such excess shall be returned to
the Participant by March 1 following the end of the
Plan Year to which the excess relates. If an excess
still exists, the Participating Company's contribution
shall be reduced as necessary.
If a person participates at any time in both a defined
benefit plan and a defined contribution plan
maintained by a Participating Company or an Affiliated
Company, the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any
Plan Year may not exceed 1.0. For purposes of this
Section, the defined contribution plan fraction for
any Plan Year is a fraction the numerator of which is
the person's annual additions in such Plan Year and
all prior years of employment, as determined above,
and the denominator of which is the lesser of the
following amounts for such Year and for each prior
Year: (a) 1.25 times the dollar limitation of Code
section 415(c)(1)(A) for the pertinent Year or (b) 1.4
times the amount that could be taken into account
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<PAGE> 17
under the limitation of Code section 415(c)(1)(B) for
the Participant. The defined benefit plan fraction
for any Plan Year is a fraction the numerator of which
is the Participant's projected annual benefit under
all plans maintained by a Participating Company or an
Affiliated Company and the denominator of which is the
lesser of the following amounts for such Year: (a)
1.25 times the dollar limitation of Code section
415(b)(1)(A) for such Year or (b) 1.4 times the amount
that could be taken into account under the percentage
limitation of Code section 415(b)(1)(B) for the
Participant for such Year.
The Committee shall monitor the contributions and
benefits with respect to each Participant under all
plans maintained by a Participating Company and any
Affiliated Company. The Committee, in its sole
discretion, shall reduce any such contributions or
benefits to prevent the combined fractions from
exceeding 1.0.
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<PAGE> 18
ARTICLE V
Investment of Contributions
5.1 Investment Funds. The Trustee shall establish a
Company Stock fund and such other investment funds as
shall be designated from time to time by any Board-
appointed committee authorized to select investment
funds.
5.2 Investment of Company Contributions. All
Participating Company contributions and the earnings
thereon shall be invested initially in Company Stock.
All Company Stock so invested shall remain in the
Company Stock fund until the fifth anniversary of the
date of investment (the "Restricted Stock"). At the
expiration of the five year period the Restricted
Stock in a Participant's Account shall lose its
investment restriction and may be invested by the
Participant, pursuant to Section 5.5 and any rules
established by the Committee thereunder, in any other
fund option or left in the Company Stock fund.
5.3 Investment of Participant Contributions. Each
Participant will direct, at the time he elects to
become a Participant under the Plan, that his
Participant contributions be invested in one or more
available fund options in accordance with any rules
the Committee in its discretion may establish. In the
event no election is made, all contributions will be
invested in a fixed income fund option designated by
the Committee for this purpose.
5.4 Changing the Current Investment Election. A
Participant's investment election for his Participant
contributions will continue in effect until changed by
the Participant. A Participant may change his current
investment election as to his future Participant
contributions effective no later than the first
payroll period as is administratively practicable
after the date such election to change is received by
the Committee or its designee. Such changes may be
made only as frequently as the Committee in its sole
discretion may permit and in accordance with any rules
the Committee in its discretion may establish.
5.5 Changing the Investment of Accumulated Contributions.
A Participant may change his investment election as to
some or all of his entire Participant Account balance
except for the Restricted Stock. Such changes may be
elected only as frequently as the Committee in its
sole discretion may permit and in accordance with any
rules the Committee in its discretion may establish.
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<PAGE> 19
5.6 Voting Rights with Respect to Company Stock. Each
Participant shall have the right to vote all shares of
Company Stock held in the Participant's Account. Each
Participant shall also have the right to direct the
Trustee whether to tender such shares of Company Stock
in the event an offer is made by any person other than
the Company to purchase such shares. The Committee
shall make any such arrangements with the Trustee as
may be appropriate to pass such voting or tender offer
rights through to a Participant. In the event a
Participant fails to vote his shares or fails to
indicate his preference with respect to a tender
offer, the Trustee shall vote the Participant's shares
or tender his shares in the same proportions as those
Plan Participants who did respond, cast their votes or
tendered their shares.
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ARTICLE VI
Participant Accounts
6.1 Individual Accounts. The Committee shall create
and maintain (or direct to be created and maintained)
individual accounts as records for disclosing the
interest in the Trust of each Participant, former
Participant and Beneficiary. Such accounts shall
record credits and charges in the manner herein
described. When appropriate, a Participant shall have
four separate accounts, a Restricted Company
Contribution Account, a Participant Pre-Tax
Contribution Account, a Participant Post-Tax
Contribution Account and a Rollover Account. The
maintenance of individual accounts is only for
accounting purposes, and a segregation of the assets
of the Trust to each account shall not be required.
6.2 Account Adjustments. Participant Accounts shall be
adjusted as follows:
(a) Earnings: The earnings (including losses as well
as gains) of the Trust shall be allocated to the
Participant Accounts of Participants who have
balances in their Accounts on each Valuation
Date. The allocation shall be made in the
proportion that the amounts in each Participant
Account bear to the total amounts in all of the
Participant Accounts similarly invested. In
determining the value of Plan assets, each
valuation shall be based on the fair market value
of assets in the Trust on the Valuation Date.
(b) Participating Company contributions: As of the
end of each month the Company Matching and
Discretionary Contributions on behalf of a
Participant during the month shall be allocated
to the Participant's Restricted Company
Contribution Account.
(c) Participant contributions: A Participant's
contributions made during a month shall be
allocated to his Pre-Tax or Post-Tax Contribution
Account, as the case may be, as of the end of
each month.
(d) Distributions and withdrawals: Distributions and
withdrawals from a Participant's Account shall be
charged to the Account as of the date paid.
(e) Forfeitures: As of the end of each Plan Year,
Forfeitures which have become available during
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<PAGE> 21
such Plan Year and are not required for
allocation under Section 6.2(f) below shall be
used to reduce the Participating Company's
current or its next succeeding contributions to
the Plan.
(f) Forfeiture Account: In the event a Participant
is entitled to receive a vested benefit pursuant
to the terms of Section 7.2 but later returns to
the service of a Participating Company prior to
incurring five consecutive one year breaks in
service, the nonforfeitable amount in his pre-
termination Restricted Company Contribution
Account plus the amount of his Forfeiture at the
time of termination shall be credited to a
separate account as of the end of the Plan Year
when he returns. The restoration of the
Forfeiture shall be made, first, from any other
Forfeitures arising in such Year prior to
disposition under Section 6.2(e) and, if not
available from such Forfeitures, from
Participating Company contributions for the
Year. At any relevant time, the Participant's
nonforfeitable portion of the separate account
will be equal to an amount ("X") determined by
the formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying this formula: P is the
nonforfeitable percentage at the relevant time;
AB is the account balance at the relevant time; D
is the amount of the distribution; and R is the
ratio of the account balance at the relevant time
to the account balance after distribution.
The separate account need not be maintained after
a Participant has incurred five consecutive one
year breaks in service after the distribution of
benefits to him. For purposes of this Section a
one year break in service means a Plan Year
during which an Employee performs no services for
a Participating Company or an Affiliated Company.
6.3 Statements to Participants. On a periodic basis, but
no less frequently than once during each Plan Year,
the Committee (or its designee) will provide each
Participant with a statement showing his interests in
the Plan's various investment funds. The statement
may show a Participant's interest in the Company Stock
fund in terms of the number of shares of Company
Stock, their dollar value, or both. As an alternative
to showing the dollar or stock value of each Account,
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<PAGE> 22
the Committee in its discretion may express each
Participant's interest in terms of units. The
statement shall also indicate the portion of his
Account that is vested and if there is none, the
earliest date on which vesting shall occur.
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<PAGE> 23
ARTICLE VII
Retirement or Other Termination of Employment
7.1 Retirement or Disability. If a Participant's
employment with a Participating Company is terminated
(i) at or after his Normal Retirement Age, (ii) at or
after his Early Retirement Age, or (iii) at an earlier
age because of disability, the Participant's accounts
shall all be fully vested and he shall be entitled to
receive the entire balance of such accounts in
accordance with the provisions of Article IX. For
purposes of this Section 7.1 the term "disability"
means a physical or mental condition which, in the
judgment of the Committee, based on medical reports
and other evidence satisfactory to the Committee, will
permanently prevent an Employee from satisfactorily
performing his usual duties for a Participating
Company and which entitle the Employee to receive
Social Security disability benefits.
If a Participant terminates employment, whether
voluntarily or involuntarily, prior to suffering a
disability or prior to age 55, he shall receive only
that portion of his accounts that have become vested
under Section 7.2.
7.2 Vested Benefits. If a Participant terminates
employment with a Participating Company before he
reaches age 55 or suffers a disability, he shall be
entitled to receive the entire amount credited to his
Participant Pre-Tax Contribution Account, his
Participant Post-Tax Contribution Account and his
Rollover Account plus the amount in his Restricted
Company Contribution Account which has become vested.
The vested amount in the Restricted Company
Contribution Account shall be determined in accordance
with the following schedule:
Length of Percent of Percent of
Service Account Vested Account Forfeited
less than 6 months 0% 100%
6 months or more 100% 0%
If any Plan amendment changes the Plan's vesting
schedule, each Participant in the Plan as of the date
the new schedule is adopted shall have his vested
percentage determined under the vesting schedule which
provides him with the greatest vested benefit at any
particular point in time.
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<PAGE> 24
Any Forfeiture that may arise by virtue of the
application of this Section shall be treated in
accordance with the provisions of Section 6.2(e).
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<PAGE> 25
ARTICLE VIII
Death
8.1 Death While Actively Employed. If a Participant dies
while actively employed, the Participant's Beneficiary
will be entitled to receive l00 percent of the value
of his Participant Account. This amount shall consist
of the Account's value as of the Valuation Date next
following the date of the Participant's death.
8.2 Death After Retirement. If a Participant dies after
retirement, any benefit payable to the Participant's
Beneficiary will depend upon the method that has been
employed to distribute the value of his Participant
Account in accordance with Article IX.
8.3 Beneficiary. If a Participant is married, his
Beneficiary shall be his spouse who shall be entitled
to receive his remaining account balance, upon the
Participant's death. Upon the written election of the
Participant, with his spouse's written consent, a
Participant may designate another Beneficiary. This
election and spousal consent must either be notarized
or be witnessed by a Plan representative and returned
to the Committee. If such election has been made or
if the Participant is not married, the Participant
will designate the Beneficiary (along with alternate
Beneficiaries) to whom, in the event of his death, any
benefit is payable hereunder. Each Participant has
the right, subject to the spousal consent requirement
noted above, to change any designation of
Beneficiary. A designation or change of Beneficiary
must be in writing on forms supplied by the Committee
and any change of Beneficiary will not become
effective until such change of Beneficiary is filed
with the Committee, whether or not the Participant is
alive at the time of such filing; provided, however,
that any such change will not be effective with
respect to any payments made by the Trustee in
accordance with the Participant's last designation and
prior to the time such change was received by the
Committee. The interest of any Beneficiary who dies
before the Participant will terminate unless otherwise
provided. If a Beneficiary is not validly designated,
or is not living or cannot be found at the date of
payment, any amount payable pursuant to this Plan will
be paid to the spouse of the Participant if living at
the time of payment, otherwise in equal shares to such
children of the Participant as may be living at the
time of payment; provided, however, that if there is
no surviving spouse or child at the time of payment,
such payment will be made to the estate of the
Participant.
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<PAGE> 26
ARTICLE IX
Payment of Benefits
9.1 Form of Payment. Except as may be restricted by
Sections 9.2 and 9.3, any Participant or, if the
choice is his, any Beneficiary who is entitled to
receive benefits under Articles VII or VIII may elect
to receive the amount in the Participant Account in
accordance with one of the following elections, all of
which shall be actuarial equivalents:
OPTION A: A lump sum.
OPTION B: Periodic payments of substantially
equal amounts for a specified number of years not
in excess of twenty. Such periodic payments
shall be made at least annually. In the event
periodic payments are elected, the Participant
shall direct in writing how the remaining balance
of his account is to be invested.
OPTION C: For any amounts transferred to this
Plan from another plan containing payment options
in addition to Options A & B, any option
available under the other plan as set forth in
Appendix B. Payments under this Option C shall
be available only with respect to the transferred
funds. Amounts allocated to a Participant
Account after the transfer date shall be paid out
only under Option A or Option B.
9.2 Option C Requirements for Married Participants. If a
married Participant elects an annuity under Option C,
unless he makes a written election, as outlined below,
to the contrary his form of benefit shall be a
Qualified Joint and Survivor Annuity. If benefits
become payable on account of the death of a married
Participant to whom an annuity option is available
under Option C, the normal form of benefit shall be a
Qualified Pre-Retirement Survivor Annuity. These
benefits shall become automatically payable unless the
Participant or his spouse, as the case may be, makes a
written election within the Election Period to receive
one of the alternate forms of benefits specified in
Section 9.1 or Appendix B. An election by the
Participant must be consented to by his spouse in
writing. The spouse's consent shall acknowledge the
effect of the election and shall be either notarized
or witnessed by a Plan representative. Failure to
obtain the spouse's consent or the revocation of a
previously designated optional method of payment shall
result in payment of benefits in the form of a
Qualified Joint and Survivor Annuity or a Qualified
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<PAGE> 27
Pre-Retirement Survivor Annuity, as the case may be,
unless another election is made. To assist the
Participant and his spouse in making any election with
respect to waiving the Qualified Joint and Survivor
Annuity, the Committee shall provide the Participant,
not less than 30 nor more than 90 days before his 55th
birthday a retirement application form describing the
normal and optional forms of benefit payments,
including their relative financial effects in terms of
dollars per annuity payment on the Participant and his
spouse. This form shall provide a place for the
Participant to indicate his annuity starting date and
the form of benefit he desires. In the case of a
Qualified Pre-Retirement Survivor Annuity, a
substantially similar notice shall be provided to the
Participant during the period beginning on the first
day of the Plan Year in which the Participant attains
age 32 and ending on the last day of the Plan Year
preceding the Plan Year in which the Participant
attains age 35.
9.3 Payments from Company Stock Fund. If a recipient
elects a lump sum payment under Option A of
Section 9.1 or installment payments under Option B of
Section 9.1, payment from the Participant's Company
Stock fund account may be made either in cash or in
Company Stock. If a person elects, or pursuant to
Section 9.2 is required, to receive any annuity option
under Section 9.2 or Option C, the amounts in his
Company Stock fund shall be liquidated and combined
with his amounts in all other investment funds to
purchase an annuity contract pursuant to which only
cash benefits will be paid.
9.4 Time of Payment. A Participant or Beneficiary who
becomes entitled to receive a benefit at any time when
the Participant Account is $3,500 or less will be
cashed out for the full amount of the account balance
as soon as administratively practicable. If the
account balance is in excess of $3,500 it shall be
paid prior to Normal Retirement Age only with the
written consent of the Participant and, if married,
with the consent of the Participant's spouse in a
writing which acknowledges the effect of such consent
and which is witnessed by a Plan representative or is
notarized. In the case of death, the written consent
of the Participant's Beneficiary shall be required for
amounts in excess of $3,500.
Benefit payments shall normally begin not later than
the April l following the calendar year during which
the event giving rise to the eligibility for payment
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<PAGE> 28
shall have occurred. In no event shall benefits begin
later than sixty days after the close of the Plan Year
in which the latest of the following occurs: (1) the
Participant's attainment of age 65; (2) the 10th
anniversary of the year in which the Participant
commenced participation in this Plan; (3) the
termination of the Participant's service with a
Participating Company; or (4) the date specified in
writing to the Committee by the Participant (but not
later than the year in which he attains age 70 1/2).
In no event, however, shall benefit payments commence
later than the April 1 following the calendar year in
which a Participant attains age 70 1/2 even if he
continues in employment with a Participating Company.
Notwithstanding any direction by the Participant to
the contrary, all payments must be payable pursuant to
a schedule whereby the entire amount in the
Participant's Account is paid over a period that does
not extend beyond the life of the Participant or over
the lives of the Participant and any individual he has
designated as his Beneficiary (or over the life
expectancies of the Participant and his designated
individual Beneficiary). In addition, unless the
benefit is payable as a Qualified Joint and Survivor
Annuity, the payment method selected must provide that
more than 50 percent of the present value of the
payments projected to be paid to the Participant and
his Beneficiary will be paid to the Participant during
his life expectancy.
In the event of the death of a Participant, former
Participant or Beneficiary while benefits are being
paid under a schedule which meets the requirements of
the preceding paragraph, payments shall continue
pursuant to a schedule which is at least as rapid as
the period selected. In the event of the death of a
Participant or former Participant before benefit
payments have commenced, any death benefit shall be
distributed within five years of death unless the
following conditions are met:
(i) payments are made to an individual Beneficiary
designated by the Participant;
(ii) payments are made for the life of such individual
Beneficiary or over a period not extending beyond
his life expectancy; and
(iii) payments commence within one year of death.
If the designated Beneficiary is the Participant's
spouse, payments will be paid within a reasonable
period of time after the Participant's death, but may
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<PAGE> 29
be delayed until the date the Participant would have
attained age 70 1/2, if the Beneficiary so elects. If
the spouse dies before payments begin, the rules of
this paragraph shall be applied as if the spouse were
the Participant. Notwithstanding the provisions of
this Section the distribution requirements of Code
section 401(a)(9) and the regulations thereunder are
hereby incorporated by this reference and shall
supersede any conflicting Plan provisions.
9.5 Death of Participant Prior to Receiving Full
Distribution. Except as provided in Section 8.2, if a
Participant dies after having terminated employment
and prior to receiving a distribution of his
Participant Account, then the payments that would
otherwise have been made to the Participant will be
made to his Beneficiary.
9.6 QDROs. Benefits shall be payable under this Plan to
an alternate payee pursuant to the terms of any
qualified domestic relations order. The Committee has
the responsibility for determining if a domestic
relations order is qualified and whether its payment
terms are consistent with the terms of the Plan. If
appropriate, the amounts subject to a QDRO may be
segregated from the Participant's Account and placed
in a separate account for the benefit of the alternate
payee who shall thereupon be treated for Plan purposes
as a Participant. Any amounts payable to an alternate
payee may, at the alternate payee's request, be paid
from the Plan immediately pursuant to the terms of the
QDRO and this Plan.
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<PAGE> 30
ARTICLE X
Withdrawals and Loans During Employment
10.1 Age 59 1/2 Withdrawals. A Participant who has reached
age 59 1/2 but who has not yet terminated employment
may withdraw all or a portion of his vested
accumulated account balance under the Plan subject to
the limitations specified in Section 10.4.
10.2 Participant Post-Tax Contributions. A Participant
may, by filing a written request with the Committee,
signed by the Participant and the Participant's
spouse, elect to withdraw amounts in his Participant
Post-Tax Contribution Account as follows:
(a) Contributions. A withdrawal of up to 100 percent
of Participant Post-Tax Contributions or, if
less, l00 percent of the then value of such
contributions may be made from the Plan.
(b) Earnings. A withdrawal of up to 100 percent of
the earnings on Post-Tax Contributions may be
made by a Participant from the Plan.
10.3 Participant Pre-Tax Contributions. No earnings in a
Participant's Pre-Tax Contribution Account may be
withdrawn prior to age 59 1/2. A Participant may
withdraw his Pre-Tax Contributions from his
Participant Pre-Tax Contribution Account prior to age
59 1/2 only if the withdrawal is made on account of an
immediate and heavy financial need of the Participant
that cannot be satisfied from other resources
available to the Participant. For purposes of this
Section an immediate and heavy financial need shall
mean (1) expenses incurred for medical care or
necessary to obtain medical care for a Participant, a
Participant's spouse or a Participant's dependent; (2)
the purchase of a Participant's principal residence;
(3) tuition and related educational fees for
post-secondary education but only for the next 12
months for a Participant, a Participant's spouse or a
Participant's dependent, or remedial school tuition;
(4) prevention of eviction or mortgage foreclosure;
(5) expenses arising from the death of a spouse or
dependent; (6) financial loss due to a sudden
catastrophe; (7) extraordinary legal expenses; (8)
adoption expenses; or (9) any other need recognized by
the IRS in documents of general applicability. A
Participant will be deemed to lack other resources if
all of the following conditions are satisfied: (1)
the Participant must have obtained all distributions
(except hardship) and all nontaxable loans available
from all plans of any Participating Company; (2) the
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<PAGE> 31
Participant may not make any contributions to any plan
of any Participating Company for at least 12 months
following the hardship withdrawal and (3) the dollar
limit on pre-tax contributions ($8,994 as indexed for
inflation after 1993) for the calendar year following
the hardship shall be reduced by the amount of the
hardship withdrawal. If the foregoing conditions are
not satisfied, the Committee may reasonably rely on
statements and representations made by the Participant
with respect to his lack of other financial
resources. The amount of the withdrawal cannot exceed
the amount required to relieve the financial need
(including any amounts necessary to pay federal, state
or local income taxes or penalties reasonably
anticipated to result from the distribution).
10.4 Limitations on In-Service Withdrawals.
(a) No more than two in-service withdrawals are
permitted in any one Plan Year.
(b) No withdrawal will be permitted under this
Article unless the amount to be withdrawn is at
least $200 or l00% of the aggregate value of the
Participant's relevant account from which
withdrawals are being requested if such value is
less than $200.
(c) Unless otherwise specified by the Participant,
any withdrawal of Participant contributions from
his Participant Post-Tax Contribution Account
will be satisfied first by a withdrawal of his
pre-1987 contributions, if any, and then by a
withdrawal of his post-1986 contributions.
(d) The withdrawal of any amounts from the Company
Stock fund by a Participant who is an "officer,"
"director" or the "beneficial owner of more than
10 percent of any class of equity security" of
the Company within the meaning of these terms
under section 16 of the Securities Exchange Act
of 1934 shall result in such Participant's
automatic suspension from making Plan
contributions into the Company Stock fund for a
period of six months from the date of the
withdrawal.
(e) Any withdrawal from a Participant's Post-Tax
Contribution Account will result in an automatic
<PAGE>
<PAGE> 32
suspension of the Participant's right to make future
Plan contributions for a period of six months from the
date of the withdrawal. During the period of
suspension, Company matching contributions will also
be suspended. Finally, after the Participant resumes
making contributions to the Plan, no make-up
contributions will be permitted for the period of the
suspension.
10.5 Fund to be Charged with Withdrawal. A Participant may
specify the investment fund or combination of funds to
which a withdrawal is to be charged. If the
Participant fails to make any designation, a
distribution will be made out of the Participant's
interest in each of the funds in proportion to the
Participant's share in these funds.
10.6 Loans to Participants. The Trustee shall, if the
Committee directs, make a loan to a Participant from
any or all of the Participant's accounts subject to
such rules as the Committee may prescribe and subject
to the following conditions:
(a) An application for a loan by a Participant shall
be made in writing to the Committee;
(b) A loan must be for a minimum of $500, only two
loans (only one for the purchase of a principal
residence) may be outstanding at any one time,
only one loan refinancing per year will be
permitted;
(c) No loan shall be made to the extent that such
loan when added to all other loans to the
Participant would exceed the lesser of (1) 50
percent of the vested amounts in all of the
Participant's accounts under the Plan or (2)
$50,000 reduced by the excess, if any, of the
highest outstanding balance of loans during the
one year period ending on the day before the loan
is made over the outstanding balance of loans to
the Participant on the date the loan is made. In
determining whether the foregoing loan limits are
satisfied all loans from all plans of a
Participating Company and of any Affiliated
Company shall be aggregated.
(d) The period of repayment for any loan shall be
arrived at by mutual agreement between the
Committee and the borrower, but such period in no
event shall exceed five years except that a loan
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<PAGE> 33
may be granted for a period not to exceed 25
years if the proceeds are used to purchase the
Participant's principal residence;
(e) All loans must be repaid under a substantially
level amortization period with payments being
made at least quarterly;
(f) Each loan shall be made against collateral being
the assignment of 50 percent of the borrower's
entire right, title and interest in and to the
Trust Fund, supported by the borrower's
collateral promissory note for the amount of the
loan, including interest, payable to the order of
the Trustee and/or such other collateral as the
Committee may require;
(g) Each loan shall bear interest at a rate fixed by
the Committee. The rate shall be commensurate
with the rates charged by persons in the business
of lending money for loans which would be made
under similar circumstances. Interest rates
granted at different times and to Participants in
differing circumstances may vary depending on
such differences;
(h) A loan shall be treated as a directed investment
by the borrower with respect to his accounts.
The interest paid on the loan shall be credited
to the borrower's accounts and he shall not share
in the earnings of the Plan's assets with respect
to the amounts borrowed and not yet repaid;
(i) A loan to a married Participant requires the
written, notarized consent of the Participant's
spouse;
(j) No distribution shall be made to any Participant,
former Participant or Beneficiary unless and
until all unpaid loans, including accrued
interest thereon, have been liquidated or offset
against the account; and
(k) A loan from the Company Stock fund account of a
Participant who is an "officer," "director" or
the "beneficial owner of more than 10 percent of
any class of equity security" of the Company
within the meaning of these terms under section
16 of the Securities Exchange Act of 1934 shall
result in such Participant's automatic suspension
from making Plan contributions into the Company
<PAGE>
<PAGE> 34
Stock fund for a period of six months from the
date of the loan. In addition, no repayment of
any such loan shall be credited to a
Participant's Company Stock fund.
<PAGE>
<PAGE> 35
ARTICLE XI
Plan Administration
11.1 Appointment of Committee. The Board shall appoint an
Employees' Benefit Committee to administer the Plan.
Any person, including an officer or other employee of
a Participating Company, is eligible for appointment
as a member of the Committee. Such members shall
serve at the pleasure of the Board. Any member may
resign by delivering his written resignation to the
Board. Vacancies in the Committee shall be filled by
the Board.
11.2 Named Fiduciary and Plan Administrator. The Committee
shall be the Named Fiduciary and Plan Administrator as
these terms are used in ERISA. The Committee shall
appoint a Secretary who shall also be the agent for
the service of legal process.
11.3 Powers and Duties of Committee. The Committee shall
administer the Plan in accordance with its terms and
shall have all powers necessary to carry out the
provisions of the Plan, except such powers as are
specifically reserved to the Board or some other
person. The Committee's powers include the power to
make and publish such rules and regulations as it may
deem necessary to carry out the provisions of the
Plan. The Committee shall interpret the Plan and
shall determine all questions arising in the
administration, interpretation, and application of the
Plan.
The Committee shall notify the Trustee of the
liquidity and other requirements of the Plan from time
to time.
11.4 Operation of Committee. The Committee shall act by a
majority of its members at the time in office, and
such action may be taken either by a vote at a meeting
or without a meeting. Any action taken without a
meeting shall be reflected in a written instrument
signed by a majority of the members of the Committee.
A member of the Committee who is also a Participant
shall not vote on any question relating specifically
to himself. Any such question shall be decided by the
majority of the remaining members of the Committee.
The Committee may authorize any one or more of its
members to execute any document on behalf of the
Committee, in which event the Committee shall notify
the Trustee in writing of such action and the name or
names of its member or members so designated. The
Trustee thereafter shall accept and rely upon any
document executed by such member or members as
representing action by the Committee until the
Committee shall file with the Trustee a written
<PAGE>
<PAGE> 36
revocation of such designation. The Committee may
adopt such by-laws or regulations as it deems
desirable for the conduct of its affairs.
The Committee shall keep a record of all its
proceedings and acts and shall keep all such books of
account, records, and other data as may be necessary
for the proper administration of the Plan.
11.5 Power to Appoint Advisers. The Committee may appoint
such actuaries, accountants, attorneys, consultants,
other specialists and such other persons as it deems
necessary or desirable in connection with the
administration of this Plan. Such persons may, but
need not, be performing services for a Participating
Company. The Committee shall be entitled to rely upon
any opinions or reports which shall be furnished to it
by any such actuary, accountant, attorney, consultant
or other specialist.
11.6 Expenses of Plan Administration. The members of the
Committee shall serve without compensation for their
services as such, but their reasonable expenses shall
be paid by the Company. To the extent not paid from
Fund assets, as determined from time to time by any
Board-appointed committee, all reasonable expenses of
administering the Plan shall be paid by the Company,
including, but not limited to, fees of the Trustee,
accountants, attorneys, consultants, and other
specialists.
11.7 Duties of Fiduciaries. All fiduciaries under the Plan
and Trust shall act solely in the interests of the
Participants and their Beneficiaries and in accordance
with the terms and provisions of the Plan and Trust
Agreement insofar as such documents are consistent
with ERISA, and with the care, skill, prudence, and
diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of
an enterprise of like character and with like aims.
Any person may serve in more than one fiduciary
capacity with respect to the Plan and Trust.
11.8 Liability of Members. No member of the Committee
shall incur any liability for any action or failure to
act, excepting only liability for his own breach of
fiduciary duty. To the extent not covered by
insurance, the Company shall indemnify each member of
the Committee and any Board-appointed committee and
any employee acting on their behalf against any and
<PAGE>
<PAGE> 37
all claims, loss, damages, expense and liability
arising from any action or failure to act.
11.9 Allocation of Responsibility. The Board, Trustee,
Investment Manager and the committees established to
administer the Plan possess certain specified powers,
duties, responsibilities and obligations under the
Plan and Trust. It is intended under this Plan that
each be solely responsible for the proper exercise of
its own functions and that each shall not be
responsible for any act or failure to act of another,
unless otherwise responsible as a breach of its own
fiduciary duty.
a. Generally, the Board shall be responsible
for appointing the members of the committees
it may establish to administer this Plan.
If this Plan shall at any time permit
employees to invest any portion of Plan
assets in Company securities, the Board
shall have sole authority to terminate this
Plan and to make any discretionary
amendments, while any Board-appointed
committee given such authority shall have
authority for making non-discretionary
amendments and for recommending to the Board
any other Plan amendments it deems
appropriate.
b. The Board-appointed committees so authorized
shall have the responsibilities of making
Plan amendments not specifically reserved to
the Board in the preceding subsection,
including sole discretion to amend the Plan
if employees are not authorized to invest
Plan assets in Company securities, to select
Investment Managers, to direct the Trustee
and the Investment Managers with respect to
all matters relating to the investment of
Plan assets, to review and report to the
Board on the investment policy and
performance of Plan assets and generally to
administer the Plan according to its terms.
c. The Trustee or the Investment Manager, as
the case may be, is responsible for the
management and control of the Plan's assets
as specifically provided in the Trust
Agreement or investment manager agreement.
d. The Board may dissolve any committee it
appoints or reserve to itself any of its
<PAGE>
<PAGE> 38
powers previously delegated to a
Board-appointed committee. In addition, the
Board may reorganize the committees it
establishes from time to time and reallocate
their responsibilities among them or assign
them to other persons or committees provided
that the Employees' Benefit Committee shall
at all times continue as plan administrator
and named fiduciary as these terms are
defined in ERISA unless the Board formally
amends the Plan to reallocate these
responsibilities. The Board and the various
committees may designate persons, including
committees, other than named fiduciaries to
carry out their responsibilities (other than
trustee responsibilities) under the Plan.
11.10 Claims Review Procedure. The Committee shall maintain
a procedure under which any Participant or Beneficiary
may assert a claim for benefits under the Plan. Any
such claim shall be submitted in writing to the
Committee within such reasonable period as the rules
of the Committee may provide. The Committee shall
take action on the claim within 60 days following its
receipt and if it is denied shall at such time give
the claimant written notice which clearly sets forth
the specific reason or reasons for such denial, the
specific Plan provision or provisions on which the
denial is based, any additional information necessary
for the claimant to perfect the claim, if possible, an
explanation of why such additional information is
needed, and an explanation of the Plan's claims review
procedure. The review procedure shall allow a
claimant at least 60 days after receipt of the written
notice of denial to request a review of such denied
claim, and the Committee shall make its decision based
on such review within 60 days (l20 days if special
circumstances require more time) of its receipt of the
request for review. The decision on review shall be
in writing and shall clearly describe the reasons for
the Committee's decision.
<PAGE>
<PAGE> 39
ARTICLE XII
Amendment and Termination
12.1 Right to Amend or Terminate. Any amendment may be
made to this Plan which does not cause any part of the
Plan's assets to be used for, or diverted to, any
purpose other than the exclusive benefit of
Participants, former Participants, or Beneficiaries,
provided however, that any amendment may be made, with
or without retroactive effect, if such amendment is
necessary or desirable to comply with applicable law.
Except in the case where approved by the Secretary of
Labor because of substantial business hardship, as
provided in section 412(c)(8) of the Code, no
amendment shall be made to the Plan if it would
decrease the accrued benefit of any Participant,
eliminate or reduce an early retirement benefit or
eliminate an optional form of benefit as may be
provided in regulations under Code section 411(d)(6).
If any provisions of this Plan relating to the
percentage of a Participant's accrued benefit that is
vested are changed, any Participant with at least
three years of service may elect, by filing a written
request with the Committee within 60 days after the
later of (1) the date the amendment was adopted, (2)
the date the amendment was effective, or (3) the date
the Participant received written notice of such
amendment, to have his vested interest computed under
the provisions of this Plan as in effect immediately
prior to such amendment.
12.2 Full Vesting Upon Termination of Plan. Upon full or
partial termination of the Plan or upon complete
discontinuance of Participating Company contributions,
each affected Participant will become l00 percent
vested in the value of his Participant Account as of
the Valuation Date next following such termination or
discontinuance.
<PAGE>
<PAGE> 40
ARTICLE XIII
Top-Heavy Provisions
13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding
any other relevant provision of this Plan to the
contrary, the following rules will apply for any Plan
Year that the Plan becomes "top-heavy" (as defined in
Section 13.2):
(a) Vesting. Vesting will remain 100 percent at all
times after completion of six months' service.
(b) Minimum Contributions. For each top-heavy Plan
Year the minimum contribution allocated to the
Participant Account of each non-key employee
shall be equal to or greater than the lesser of
the following amounts:
(i) 3 percent of such non-key employee's
compensation; or
(ii) the highest percentage-of-compensation
allocation made to the Participant Account
of any key employee.
If the highest rate allocated to a key employee
is less than 3% of compensation, amounts
contributed as a result of a salary reduction
agreement shall be included in determining the
rate of contribution on behalf of key employees.
For purposes of this subsection, "compensation"
shall have the same meaning as in Section 4.4.
Minimum contributions will be made to
Participant's Account without regard to his level
of compensation or his hours of service during a
Plan Year.
(c) Limitation on Benefits. In applying the dollar
limitations under section 415(e) of the Code, the
1.25 limitation shall be supplanted by a 1.0
limitation for each year during which the Plan is
top-heavy.
(d) Maximum Compensation. The maximum annual
compensation of each employee that may be taken
into account under the Plan shall not exceed
$150,000 (or such larger amount based on cost of
living adjustments as may be permitted under the
Code).
13.2 Top-Heavy Definition. For purposes of this Section,
the Plan will be considered "top-heavy" if on any <PAGE>
<PAGE> 41
given determination date (the last day of the
preceding Plan Year or, in the case of the Plan's
first year, the last day of such Year) the sum of the
account balances for key employees is more than
60 percent of the sum of the account balances of all
employees, excluding former key employees. The
account balances shall include distributions made
during any given Plan Year containing the
determination date and the preceding four Plan Years
but shall not include the account balances for any
person who has not received any compensation from any
Participating Company at any time during the five-year
period ending on the determination date. The method
of determining the top-heavy ratio shall be made in
accordance with Code section 4l6.
In making the top-heavy calculation, (a) all the
Company's plans in which a key employee participates
shall be aggregated with all other Participating
Company plans which enable a plan in which a key
employee participates to satisfy the Code's
non-discrimination requirements; and (b) all
Participating Company plans not included in
subparagraph (a), above, may be aggregated with the
Participating Company's plans included in subparagraph
(a), above, if all of the aggregated plans would be
comparable and satisfy the Code's non-discrimination
requirements.
13.3 Key Employee Definition. A key employee will be, for
the purpose of this Article, any employee or former
employee who at any time during the Plan Year
containing the determination date or the four
preceding Plan Years is such within the meaning of
Code section 416. As of the effective date, the term
key employee includes the following individuals:
(i) an officer (but not more than 50 persons or, if
lesser, the greater of 3 or 10 percent of
employees and not including persons who earn
150 percent or less of the dollar limitation for
contributions to defined contribution plans as
specified in Code section 4l5(c)(l)(A));
(ii) one of 10 employees who has annual compensation
from the Participating Company of more than the
amount in effect under Code section 415(c)(1)(A)
owning the largest interests of the Participating
Company. The employee having the greater annual
compensation from the Participating Company shall
be considered to own the larger interest in the
Participating Company if two or more employees
<PAGE>
<PAGE> 42
had the same ownership interest in the Participating
Company;
(iii) a five-percent owner of the Participating
Company; and
(iv) a one-percent owner of the Participating Company
whose annual compensation from the Participating
Company exceeds $l50,000.
13.4 Relationship of the Normal and the Top-Heavy Vesting
Schedules. If the Plan's top-heavy status changes and
this change alters the Plan's normal vesting schedule,
no Participant's vested accrued benefit immediately
prior to such change in status shall be diminished on
account of the change in the vesting schedule. In
addition, the vesting for each Participant in the Plan
at the time of the change in status shall be
determined under whichever schedule provides the
greatest vested benefit at any particular point in
time.
13.5 Participation in Other Plans. A non-key employee who
participates in both a defined contribution plan and a
defined benefit plan of the Participating Company
shall not be entitled to receive minimum benefits
and/or minimum contributions under all such plans.
Instead, the employee shall receive a minimum benefit
equal to the lesser of 20 percent of such non-key
employee's average compensation or 2 percent of his
average compensation multiplied by his number of Years
of Service, as set forth in such defined benefit plan.
<PAGE>
<PAGE> 43
ARTICLE XIV
General Provisions
14.1 Employment Relationship. Nothing contained herein
will be deemed to give any Employee the right to be
retained in the service of a Participating Company or
to interfere with the rights of a Participating
Company to discharge any Employee at any time.
14.2 Non-Alienation of Benefits. Except as provided in
Section 10.6, benefits payable under this Plan shall
not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy
of any kind, either voluntary or involuntary,
including any such liability which arises from the
Participant's bankruptcy, prior to actually being
received by the person entitled to the benefit under
the terms of the Plan; and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits
payable hereunder, shall be void. The Trust shall not
in any manner be liable for, or subject to the debts,
contracts, liabilities, engagements or torts of any
person entitled to benefits hereunder. Nothing in
this Section shall preclude payment of Plan benefits
pursuant to a qualified domestic relations order
pursuant to Section 9.6.
14.3 Use of Masculine and Feminine; Singular and Plural.
Wherever used in this Plan, the masculine gender will
include the feminine gender and the singular will
include the plural, unless the context indicates
otherwise.
14.4 Plan for Exclusive Benefit of Employees. No part of
the corpus or income of the Trust will be used for, or
diverted to, purposes other than the exclusive benefit
of Participants and their Beneficiaries. Anything in
the foregoing to the contrary notwithstanding, the
Plan and Trust are established on the express
condition that they will be considered, by the
Internal Revenue Service, as initially qualifying
under the provisions of the Internal Revenue Code. In
the event that the Internal Revenue Service issues an
unfavorable determination with respect to a timely
request for a determination that the amended and
restated Plan and Trust qualify under the Internal
Revenue Code, the Plan and Trust will be of no effect
and the value of all contributions made by a
Participating Company and Participants since the
amendment and restatement will be returned to the
<PAGE>
<PAGE> 44
Participating Company and Participants, respectively,
within one year from the date of the denial of the
determination request. Furthermore, if, or to the
extent that, a Participating Company's tax deduction
for contributions made to the Plan is disallowed, the
Participating Company will have the right to obtain
the return of any such contributions (to the extent
disallowed) for a period of one year from the date of
disallowance. All Participating Company contributions
to this Plan are contingent upon their deductibility
under the Code. Finally, if a Participating Company's
contribution to the Plan is made by a mistake in fact,
the Participating Company will have the right to
obtain the return of such contribution for a period of
one year from the date the contribution was made.
14.5 Merger or Consolidation of Plan. There will be no
merger or consolidation with, or transfer of any
assets or liabilities to, any other plan, unless each
Participant will be entitled to receive a benefit
immediately after such merger, consolidation, or
transfer as if this Plan were then terminated which is
at least equal to the benefit he would have been
entitled to receive immediately before such merger,
consolidation, or transfer as if this Plan had been
terminated.
14.6 Payments to Minors and Incompetents. If a Participant
or Beneficiary entitled to receive any benefits
hereunder is a minor or is deemed by the Committee, or
is adjudged to be, legally incapable of giving valid
receipt and discharge for such benefits, they will be
paid to such persons as the Committee might designate
or to the duly appointed guardian.
14.7 Governing Law. To the extent that New York law has
not been preempted by ERISA, the provisions of the
Plan will be construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Plan document on its behalf
this 15th day of November, 1993.
ROCHESTER TELEPHONE CORPORATION
By /s/ Josephine S. Trubek
--------------------------
Josephine S. Trubek
Corporate Secretary
<PAGE>
<PAGE>
APPENDIX A
Participating Companies
AuSable Valley Telephone Company, Inc.
Breezewood Telephone Company
Canton Telephone Company
Citizens Telephone Company, Inc.
Distributed Solutions, Inc.
Enterprise Telephone Company
Fairmount Telephone Company, Inc.
Highland Telephone Company
Lakeshore Telephone Company
Lakewood Telephone Company
Lamar County Telephone Company, Inc.
Mid Atlantic Telecom, Inc.
Mid-South Telephone Company, Inc.
Minot Telephone Company
Ontonagon County Telephone Company
Oswayo River Telephone Company
RCI Long Distance, Inc.
RCI Long Distance New England, Inc.
Rochester Telephone Corporation
Rotelcom Inc.
Seneca-Gorham Telephone Corporation
Sylvan Lake Telephone Company, Inc.
St. Croix Telephone Company
The Thorntown Telephone Company, Inc.
Urban Telephone Corporation
Viroqua Telephone Company
Vista Telephone Company of Iowa
Vista Telephone Company of Minnesota
<PAGE>
<PAGE>
APPENDIX B
Plan Features Unique to Participating Companies
Class of
Eligible Matching Discretionary Payment
Employees Contributions Contributions Option C
Name of Company (Sec. 2.1) (Sec. 4.1) (Sec. 4.1) (Sec. 9.1)
- - - --------------- --------- ------------- ------------- --------
AuSable Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Breezewood Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Breezewood Telco Nonmanagement None See Fn 2 Straight
Life Ann. 3
Canton Telco Management 75% See Fn 1 See Fn 2 See Fn 2
Canton Telco Nonmanagement None See Fn 2 Straight
Life Ann. 4
Citizens Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Citizens Telco Nonmanagement None See Fn 2 Straight
Life Ann. 4
DSI All Employees 75% See Fn 1 See Fn 2 See Fn 3
Enterprise Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Enterprise Telco Nonmanagement None See Fn 2 Straight
Life Ann. 4
Fairmount Telco All Employees None See Fn 2 Straight
Life Ann. 4
Highland Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Lakeshore Telco All Employees None See Fn 2 Straight
Life Ann. 4
Lakewood Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Lakewood Telco Nonmanagement None See Fn 2 Straight
Life Ann. 4
Lamar Telco All Employees None See Fn 2 Straight
Life Ann. 4
Mid Atlantic All Employees 75% See Fn 1 See Fn 2 None
Mid-South Telco All Employees None See Fn 2 Straight
Life Ann. 4
Minot Telco All Employees None See Fn 2 Straight
Life Ann. 4
Ontonagon Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Oswayo Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Oswayo Telco Nonmanagement None See Fn 2 Straight
Life Ann. 4
RCI LD Management 75% See Fn 1 See Fn 2 See Fn 3
RCI LD Nonmanagement 75% See Fn 1 See Fn 2 None
RCI LD NE All Employees 75% See Fn 1 See Fn 2&5 None
<PAGE>
<PAGE>
Class of
Eligible Matching Discretionary Payment
Employees Contributions Contributions Option C
Name of Company (Sec 2.1) (Sec 4.1) (Sec 4.1) (Sec 9.1)
- - - --------------- --------- ------------- ------------- --------
Rotelcom Management 75% See Fn 1 See Fn 2 See Fn 3
Rotelcom Nonmanagement 75% See Fn 1 See Fn 2 None
Rochester Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Seneca-Gorham Telco Management 75% See Fn 1 See Fn 2 See Fn 2
Seneca-Gorham Telco Nonmanagement 75% See Fn 1 See Fn 2 Straight
Life Ann 4.
St. Croix Telco All Employees None See Fn 2 Straight
Life Ann. 3
Sylvan Lake Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Thorntown Telco Management 75% See Fn 1 See Fn 2 See Fn 3
Thorntown Telco Nonmanagement 75% See Fn 1 See Fn 2&6 None
Urban Telco All Employees None See Fn 2 Straight
Life Ann. 3
Viroqua Telco All Employees None See Fn 2 Straight
Life Ann. 3
Vista Telcos Management 70% See Fn 6 See Fn 2&7 None
- - - ----------------------------------
1/ 75% of the first 6% of Compensation that a Participant contributes to the
Plan during a Plan Year.
2/ A Participating Company may contribute each year in its discretion the
same flat dollar amount for each of its eligible employees. The amount,
if any, need not be identical for each Participating Company each year.l
<PAGE>
<PAGE>
3/ The following additional payment options are available to a Participant
under Option C:
- A straight life annuity.
- A reduced retirement income payable monthly during his life with
the provision that in the event of his death prior to receiving
one hundred twenty (120) monthly installments, the remainder
thereof shall be paid to his beneficiary.
- A reduced retirement income, payable during his life, with the
provision that after his death such reduced income shall be
continued during the life of, and shall be paid to, a contingent
annuitant.
- A reduced retirement income, payable during his life, with the
provision that after his death an income at 3/4 the rate of his
reduced income shall be continued during the life of, and shall be
paid to, a contingent annuitant.
- A reduced retirement income payable during his life with the
provision that after his death an income at 1/2 the rate of his
reduced income shall be continued during the life of, and shall be
paid to, a contingent annuitant.
4/ A straight life annuity on the life of the participant is the only Option
C benefit available.
5/ Discretionary contributions, if any, are allocated to Participants'
accounts on the basis that each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year.
6/ 70% of the first 6% of Compensation that a Participant contributes to the
Plan during a payroll period.
7/ A minimum contribution of 1% of a Participant's Compensation for a Plan
Year is contributed by the Participating Company for each Participant.
Additional contributions are made in the discretion of the Participating
Company.
<PAGE>
EXHIBIT 10.39
ROCHESTER TELEPHONE CORPORATION
PLAN FOR THE DEFERRAL OF DIRECTORS FEES
Amendment No. 1
Pursuant to Section 13, the Plan is hereby amended,
effective November 1, 1993, by adding the following new Section
8 immediately following current Section 7 and by renumbering
the remaining Sections accordingly:
8. TRANSFER OF PARTICIPANT ACCOUNTS
A Participant may make a one-time election at any
time on or after November 1, 1993, to transfer all or
a portion of the value of his or her Participant
Account from this Plan to the Company's Directors
Common Stock Deferred Growth Plan. In such event,
future earnings on the transferred amounts shall be
based on the terms of the Directors Common Stock
Deferred Growth Plan and payment from that Plan shall
be made in whatever medium (e.g., cash or property)
may be provided for the payment of benefits from that
plan. However, the timing, method of payment and all
other elections selected by the Participant on his or
her Deferred Election Form under this Plan shall
remain irrevocable and shall continue to apply to the
transferred amounts.
No amounts held in the Directors Common Stock
Deferred Growth Plan may be transferred to this Plan,
including amounts previously transferred to such plan
from this Plan pursuant to this Section 8.
IN WITNESS WHEREOF, the Board of Directors has caused this
Amendment to be executed on its behalf this 1st day of
November, 1993.
ROCHESTER TELEPHONE CORPORATION
/s/ Josephine S. Trubek
By:--------------------------
Josephine S. Trubek
Corporate Secretary
(56ED)
<PAGE>
<PAGE>
ROCHESTER TELEPHONE CORPORATION
PLAN FOR THE DEFERRAL OF DIRECTORS FEES
1. PURPOSES
Rochester Telephone Corporation (the "Company") has
adopted this Plan for the Deferral of Directors Fees (the
"Plan") to assist its directors with their individual tax and
retirement income planning and to permit the Company to remain
competitive in attracting and retaining its directors.
2. PLAN ADMINISTRATOR
The Executive Committee of the Company's Board of
Directors shall be the Plan's administrator (the
"Administrator"). The Administrator shall have the authority
to adopt rules and regulations for carrying out the Plan and to
interpret, construe and implement the provisions of this Plan,
including eligibility for benefits prior to any change in
control of the Company.
3. ELIGIBILITY
Any director of the Company who is not an employee of the
Company or of any subsidiary of the Company may elect to
participate in this Plan.
4. AMOUNT OF DEFERRAL
A participant may elect to defer receipt of all or a
specified portion of the fees otherwise payable to the
participant for serving on the Company's Board of Directors or
any committee thereof.
5. TIME FOR ELECTING DEFERRAL
Any election to defer directors fees must be made prior to
the beginning of the calendar year that such fees are to be
earned by the participant, provided that in the first year of
eligibility a deferral election for that year must be made
within 30 days of commencing employment on the Board. An
election to commence a deferral may be made at any time in
accordance with the procedures set forth in Section 6 and any
election so made shall remain in effect until the participant
elects in writing to change his or her election for future fees.
<PAGE>
<PAGE>
-2-
6. MANNER OF ELECTING DEFERRAL
A participant shall elect a deferral by giving written
notice to the Administrator in a form substantially the same as
the Election Form attached hereto. The notice shall include
(1) the amount to be deferred; (2) the time as of which the
deferral is to commence; (3) whether the deferred amounts plus
the earnings thereon will be paid within 30 days of termination
from the Board or 30 days following the end of year in which
termination occurs; and (4) an election of either a lump sum
payment or the number of monthly installments (not to exceed
60) for the payment of the deferred amounts.
7. PARTICIPANT ACCOUNTS
There shall be established for each participant a
Participant Account which shall be credited with the
participant's deferrals plus earnings as may be credited from
time to time on investments under any trust arrangement
established to hold deferrals. If no trust arrangement has
been established, the deferrals will be credited with simple
interest on any unpaid account balance at the rate fixed from
time to time for the payment of funds deposited with the
Company by its customers. The value of each Participant
Account shall be adjusted no less frequently than annually to
reflect contributions to the account, payments from the account
as hereinafter provided, and earnings.
All amounts credited to Participant Accounts shall be
fully vested at all times. Except for the possible claims of
the Company's general creditors, they shall not be subject to
forfeiture on account of any action by a participant or by the
Company, including termination of service on the Board.
8. PAYMENT OF DEFERRED AMOUNTS
No withdrawal may be made from a Participant Account
except as provided in this Section 8. Payments from an Account
shall either commence or be made in a lump sum within 30 days
following termination from the Board or within 30 days
following the close of the year in which termination occurs in
accordance with a participant's election form. Payments from a
Participant Account shall be made only in cash.
<PAGE>
<PAGE>
-3-
Payments may be made in the form of either a lump sum
payment or monthly installments over a period of years not to
exceed five. Where payments are made in monthly installments,
the balance credited to a Participant Account shall continue to
be adjusted for earnings as provided in Section 7.
If installment payments are elected, the first installment
shall equal the value of the Participant Account at such time
multiplied by a fraction, the numerator of which is one and the
denominator of which is the total number of monthly
installments to be made. All subsequent installments shall
equal the value of the Participant Account as of the last
valuation date preceding the installment which is to be paid
multiplied by a fraction, the numerator of which is one and the
denominator of which is the total number of installments
elected minus the number of installments already paid.
In the event of a participant's death before he or she has
received all of the deferred payments to which he or she is
entitled hereunder, the remaining value of the Participant
Account shall be paid to the participant's estate in a lump sum
no later than 30 days following the end of the year in which
the participant died.
Notwithstanding a participant's election of installment
payments, the Company, in its sole discretion, shall have a
right to accelerate any such payments or to make payment of the
balance of a Participant Account in a lump sum.
9. PARTICIPANT'S RIGHTS UNSECURED
The maintenance of individual Participant Accounts is for
bookkeeping purposes only. The Company may, but is not
obligated to, acquire or set aside any particular assets for
the discharge of its obligations, nor is any participant to
have any property rights in any particular assets held by the
Company, whether or not held for the purpose of funding the
Company's obligations.
The right of any participant or his or her estate to
receive future installments under the provisions of this Plan
shall be an unsecured claim against the general assets of the
Company.
<PAGE>
<PAGE>
-4-
10. CHANGE IN CONTROL
In the event of a Change in Control, as defined in the
trust agreement, amounts credited to Participant Accounts shall
be paid out in accordance with the terms of the trust agreement
and any participant elections. If no trust agreement is in
effect, change in control shall have the meaning given this
term in the Company's Supplemental Management Pension Plan and
benefits shall be paid in accordance with participant elections.
11. STATEMENT OF ACCOUNT
Statements will be sent to participants no less frequently
than annually as to the value of their Participant Accounts.
12. ASSIGNABILITY
No right to receive payments hereunder shall be
transferable or assignable by a participant, except by will or
by the laws of descent and distribution.
13. AMENDMENT
This Plan may at any time or from time to time be amended,
modified or terminated by the Board of Directors of the
Company. No amendment, modification or termination shall
accelerate payment of amounts previously deferred, provide for
additional benefits, or, without the consent of a participant,
adversely affect such participant's accruals in his or her
Participant Account.
14. GOVERNING LAW
This Plan and any participant elections hereunder shall be
interpreted and enforced in accordance with the laws of the
State of New York.
15. EFFECTIVE DATE
The effective date of this Plan is January 1, 1990.
IN WITNESS WHEREOF, the Board of Directors has caused its
duly authorized member to execute this Plan document on its
behalf this 22nd day of December, 1989.
ROCHESTER TELEPHONE CORPORATION
By: /s/ F. R. Pestorius
--------------------------
Its Vice President-Finance
--------------------------
(56ED)
<PAGE>1
EXHIBIT 10.40
ROCHESTER TELEPHONE CORPORATION
DIRECTORS COMMON STOCK DEFERRED GROWTH PLAN
1. Purposes
Rochester Telephone Corporation (the "Company") hereby
establishes the Directors Common Stock Deferred Growth Plan
(the "Plan") to assist its directors with their individual tax
and retirement income planning, to permit the Company to remain
competitive in attracting and retaining its directors and to
authorize deferred fees to be invested in Company securities.
2. Plan Administrator
The Committee on Directors of the Company's Board of
Directors shall be the Plan's administrator (the
"Administrator"). The Administrator shall have the authority
to adopt rules and regulations for carrying out the Plan and to
interpret, construe and implement the provisions of this Plan,
including eligibility for benefits.
3. Eligibility
Any director of the Company who is not an employee of
the Company or of any subsidiary of the Company may elect to
participate in this Plan.
4. Amount of Deferral
A participant may elect to defer receipt of all or a
specified portion of the fees otherwise payable to the
participant for serving on the Company's Board of Directors or
any committee thereof.
5. Time for Electing Deferral
Any election to defer directors fees must be made
prior to the beginning of the calendar year that such fees are
to be earned by the participant, provided that in the first
year of eligibility a deferral election for that year must be
made within 30 days of commencing employment on the Board. An
election to commence a deferral may be made at any time in
accordance with the procedures set forth in section 6 and any
election so made shall remain in effect until the participant
elects in writing to change his or her election for future
fees, but any such change with respect to an investment in
Company securities will not be effective until six months after
so elected.
<PAGE>
<PAGE>2
6. Manner of Electing Deferral
A participant shall elect a deferral by giving
written notice to the Administrator in a form substantially the
same as the Election Form attached hereto. The notice shall
include (1) the amount to be deferred; (2) the time as of which
the deferral is to commence; and (3) whether the deferred
amounts plus the earnings thereon will be paid within 30 days
of termination from the Board or 30 days following the end of
year in which termination occurs.
7. Participant Accounts
If a trust arrangement has been established, each
participant shall have an account (the "Participant Account")
to reflect his or her investment election as specified on the
Election Form. Amounts deferred into a Participant Account
shall be invested by the trustee in such securities of the
Company as shall be specified by the Administrator. The
trustee shall purchase such securities on the open market at
their fair market value at the time of purchase. Earnings paid
on securities allocated to a Participant Account shall be used
to purchase additional securities of the Company. Funds
allocated to a Participant Account that cannot be invested in
Company securities may be invested in any fund or funds
designated by the Administrator.
If no trust arrangement has been established, all
deferrals will be credited with simple interest on any unpaid
account balance at the rate fixed from time to time for the
payment of funds deposited with the Company by the customers.
The value of each Participant Account shall be
adjusted no less frequently than annually to reflect deferrals
into the account, payments from the account as hereinafter
provided, earnings on investments and changes in the market
value of investments.
All amounts credited to Participant Accounts
shall be fully vested at all times. Except for the possible
claims of the Company's general creditors, they shall not be
subject to forfeiture on account of any action by a participant
or by the Company, including termination of service on the
Board.
8. Transfer of Participant Accounts
A Participant may transfer to this Plan a
participant account held under the Company's Plan for the
Deferral of Directors Fees. In the event of any such transfer,
the amounts will be invested in accordance with the terms of
<PAGE>
<PAGE>3
this Plan and shall be paid out in the medium provided for
payments from this Plan. The Participant's deferral election
under the Plan for the Deferral of Directors Fees shall
otherwise remain irrevocable and shall govern the time and
method of payment of the transferred amounts.
No amounts held in this Plan, including amounts
transferred to it pursuant to the foregoing paragraph may be
transferred from this Plan to the Plan for the Deferral of
Directors Fees.
9. Payment of Deferred Amounts
No withdrawal may be made from a Participant
Account except as provided in this section 9. Payments from an
Account shall be made in a lump sum within 30 days following
termination from the Board or within 30 days following the
close of the year in which termination occurs in accordance
with a participant's Election Form.
Payments from a Participant Account that has been
invested in Company securities shall be made only in whole
shares of such securities with any fractional share made in
cash. Each participant or beneficiary shall execute any
documents deemed necessary by the Administrator to comply with
any applicable securities laws.
10. Participant's Rights Unsecured
The maintenance of individual Participant
Accounts is for bookkeeping purposes only. The Company may,
but is not obligated to, acquire or set aside any particular
assets for the discharge of its obligations, nor is any
participant to have any property rights in any particular
assets held by the Company, whether or not held for the purpose
of funding the Company's obligations.
The right of any participant or his or her estate
to receive future payments under the provisions of this Plan
shall be an unsecured claim against the general assets of the
Company.
11. Change in Control
In the event of a Change in Control, as defined
in the trust agreement, amounts credited to Participant
Accounts shall be paid out in accordance with the terms of the
trust agreement and any participant elections. If no trust
agreement is in effect, change in control shall have the
meaning given this term in the Company's Supplemental
Management Pension Plan and benefits shall be paid in
<PAGE>
<PAGE>4
accordance with participant elections. Notwithstanding the
foregoing, shares of Company securities purchased with deferred
fees shall not be paid out until six months after the date of
election pursuant to which such purchase was made.
12. Statement of Account
Statements will be sent to participants no less
frequently than annually as to the value of their Participant
Accounts.
13. Assignability
No right to receive payments hereunder shall be
transferable or assignable by a participant, except by will or
by the laws of descent and distribution.
14. Amendment
This Plan may at any time or from time to time be
amended, modified or terminated by the Board of Directors of
the Company. No amendment, modification or termination shall
accelerate payment of amounts previously deferred, provide for
additional benefits, or, without the consent of a participant,
adversely affect such participant's accruals in his or her
Participant Account.
15. Governing Law
This Plan and any participant elections hereunder
shall be interpreted and enforced in accordance with the laws
of the State of New York.
16. Effective Date
The effective date of this Plan is November l,
1993.
IN WITNESS WHEREOF, the Board of Directors has
caused its duly authorized member to execute this Plan document
on its behalf this 1st day of November, 1993.
ROCHESTER TELEPHONE CORPORATION
/s/ Josephine S. Trubek
By ---------------------------
Josephine S. Trubek
Its Corporate Secretary
57ED
<PAGE>
<TABLE>
Exhibit 11
ROCHESTER TELEPHONE CORPORATION
CONSOLIDATED
COMPUTATION OF NET INCOME PER AVERAGE SHARE OF
COMMON STOCK ON A FULLY DILUTED BASIS
In thousands, except
per share data.
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income applicable to common stock $81,533 $68,243 $77,857 $50,743 $82,749
Add: Interest on convertible debentures 553 561 562 594 611
------- ------- ------- ------- -------
$82,086 $68,804 $78,419 $51,337 $83,360
Less: Increase in related federal income taxes 194 191 191 202 208
------- ------- ------- ------- -------
Adjusted income applicable to common stock $81,892 $68,613 $78,228 $51,135 $83,152
======= ======= ======= ======= =======
Total common shares assuming conversion at
beginning of each period of outstanding Convertible
Debentures and outstanding Convertible Preferred
Stock and Stock Options (1) 33,986 33,583 32,368 30,012 29,426
Net income per average share of common stock on a
fully diluted basis $ 2.41 $2.04 $2.42 $1.70 2.83
(1) As set forth in Notes 5, 6 and 7 of the Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>1 EXHIBIT 13
Management's Discussion of Results
of Operations and Analysis of
Financial Condition
OVERVIEW
- - - --------
Rochester Tel is pleased to report that 1993 was an
excellent year for the company and its shareowners. The
principal contributors to the company's positive results were
outstanding performances by our long distance operations and the
regional telephone companies outside of Rochester, New York.
Consolidated operating income in 1993 reached the highest
level in the company's history at $195 million, an increase of
$19.8 million, or 11.3 percent, over 1992. Operating income for
the Telecommunication Services segment improved 32.8 percent
over 1992, largely driven by results from the company's long
distance operations. Operating Income for our Telephone
Operations segment improved 8.1 percent. The regional
telephone companies outside of Rochester, New York, improved
their operating income by 22.7 percent, while the Rochester, New
York operating company's operating income declined by 7.4
percent.
By comparison, consolidated operating income in 1992 was
$175.1 million, an increase of $26.8 million, or 18.0 percent,
over 1991. Excluding the impact of our 1991 purchase accounting
acquisitions, operating income improved $13.7 million, or 10.1
percent. Operating income for Telephone Operations improved
15.4 percent over 1991. Telecommunication Services' operating
income rose 38.9 percent for the same period.
Net income was $82.7 million in 1993, a 19.1 percent
increase over 1992. Earnings per common share were $2.42 in
1993, an increase of 18 percent over 1992. In 1992, net income
was $69.4 million and earnings per common share were $2.05,
reflecting decreases of 12.2 percent and 15.6 percent,
respectively, when compared to 1991.
Effective January 1, 1993, the company adopted Financial
Accounting Standards Board Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions,"
(OPEB) using the delayed recognition of the transition
obligation method. The incremental expense included in 1993
operating income was $11.9 million. However, a substantial
portion, 50.7 percent, of the increase was offset by a change in
accounting for pensions for rate-making purposes at the
Rochester, New York operating company. The impact of these two
items on 1993 earnings, net of the income tax benefit, was $3.8
million. (See Note 11 to the Consolidated Financial
Statements.)
<PAGE>
<PAGE>2
Nonrecurring Items
The financial results for the years 1991 through 1993
include the impact of five nonrecurring items:
1. Tax Rate Change
---------------
The 1993 income tax provision includes the retroactive
impact of the federal income tax rate increase from 34 to 35
percent. The overall impact of the tax rate change was
approximately $2 million and includes approximately $400,000
attributable to years prior to 1993. (See Note 9 to the
Consolidated Financial Statements.)
2. Software Writeoff
-----------------
As part of the Rochester, New York operating company's
Settlement Agreement with the New York State Public Service
Commission (the Commission) the company agreed to write off
one-half of the costs ($3.3 million) previously deferred as part
of a project to redesign customer account records, order flow
and customer billing systems. The after-tax impact of the
charge is $2.1 million. (See Note 4 to the Consolidated
Financial Statements.)
<PAGE>
<PAGE>3
3. Sale of Assets/Investments
--------------------------
During the third quarter of 1993, the company sold its
interest in the S&A Telephone Company of Kansas. In the fourth
quarter, the company sold a substantial portion of its
investment in a Canadian long distance company. The
transactions resulted in pre-tax gains totaling $4.4 million, as
reflected on the Consolidated Statement of Income under the
caption "Gain on Sale of Assets".
4. First Mortgage Bond Refinancing
-------------------------------
On December 14, 1992, the Executive Committee of the Board
of Directors approved the refinancing of the $40 million Series
H, 9 1/2% first mortgage bonds. The company recorded an
after-tax charge of $1.1 million, or $.03 per share, in 1992
relating to the call premium, the write-off of the remaining
initial discount and associated expenses of the transaction.
The bonds were retired during January 1993 using internally
generated cash and the private placement of $35 million of debt
at a telephone subsidiary.
5. Gain on Sale of Cellular
------------------------
During 1991, the company realized a gain from the transfer
of cellular interests as part of the acquisition of the Vista
Minnesota properties from Centel. The gain, net of taxes, was
$19.5 million. Approximately $15.7 million of the gain was
recorded as a net ordinary gain on the sale of assets. The
balance of $3.8 million was recorded as an extraordinary gain
because it related to cellular properties acquired in pooling
transactions within two years of the transfer. The transfer of
cellular properties did not represent any diminishment in the
company's strategic plans for wireless services. The company
held a minority interest in each of the properties transferred,
with no reasonable expectation of gaining a majority interest or
managing role.
Consolidated income and earnings per share before
nonrecurring items for the three years ended December 31, 1993
are summarized in the following table.
<PAGE>
<PAGE>4
(All dollars, except per share amounts, are in thousands)
1993 1992 1991
---- ---- ----
Income, as stated $82,720 $69,431 $79,046
Adjustments, net of taxes
1. Tax rate change 400 - -
2. Software write-off 2,145 - -
3. Gain on sale of assets ( 3,293) - -
4. Early retirement of debt - 1,072 -
5. Cellular gain - - (19,500)
------- ------- --------
Income, after adjustment $ 81,972 $70,503 $59,546
======== ======= =======
Earnings per share, as stated $2.42 $2.05 $2.43
Adjustments
1. Tax rate change .01 - -
2. Software write-off .06 - -
3. Gain on sale of assets (.10) - -
4. Early retirement of debt - .03 -
5. Cellular gain - - (.61)
------- ------- --------
Earnings per share, after adjustments $ 2.39 $2.08 $1.82
======== ======= =======
The following sections of this report provide more specific information and
should be read together with the financial statements for the three years ended
December 31, 1993 found on pages 24 through 31.
<PAGE>
<PAGE>5
MAJOR EVENTS
Open Market Plan
- - - ----------------
In February 1993, the company filed a widely-recognized
innovative proposal with the New York State Public Service
Commission that would result in opening the Rochester, New York
local exchange market to competition and simultaneously allow
Rochester Tel to form a holding company. The company's proposal
is called the "Open Market Plan". The plan would enable
customers in the Rochester, New York service territory to select
their local telephone service provider and have a much broader
selection of products, services and prices.
The company proposes to divide the current Rochester, New
York operating company into two subsidiaries which would be
wholly owned by an unregulated parent holding company. One of
the two subsidiaries would be a regulated network facilities
provider that would sell and market wholesale network services
to retailers of telecommunication services.
The second subsidiary would be a retail company which would provide an
array of communication services on a competitive basis to
residential and business customers in the Rochester, New York
marketplace. This structure will enable the Rochester, New York
operating company to respond more promptly to changes in its
marketplace and customer demands. Informational meetings have
been held with the Staff of the New York State Public Service
Commission and all intervening parties. Negotiations were
underway as of January 1994 to reach a stipulated
settlement on the proposal. The company will aggressively
pursue approval of the "Open Market Plan" but cannot predict
whether or when it will be approved by the Commission, and, if
so, in what form.
<PAGE>
<PAGE>6
Regulatory Proceedings
- - - ----------------------
In 1986, the company and the New York State Public Service
Commission entered into an agreement which allowed the company
to pursue certain acquisitions and investments without further
Commission approval. This agreement was amended in 1987, 1989
and 1991. The 1991 amendment preceded the acquisition of the
Vista Telephone properties in Minnesota and Iowa from Centel
Corporation. Certain portions of the amendment expired in June
1993, and at the request of the company, the Commission extended
the amendment to December 1993. It is anticipated that
resolution of the company's Open Market Plan filing and the
associated provision allowing Rochester Tel to form a holding
company would eliminate the necessity of this agreement. Until
the Open Market Plan proposal is resolved, effective January 1,
1994, the company must petition the Commission for approval of
future acquisitions.
In 1984, the New York State Public Service Commission
initiated a proceeding to investigate whether or not the
company's unregulated subsidiaries should pay a royalty to the
Rochester, New York operating company for alleged intangible
benefits received from the use of the Rochester Telephone name
and reputation. The proceeding was reopened in 1990. In its
Opinion and Order in Case 87-C-8959, issued July 6, 1993, the
Commission, by a three-to-two vote, imposed a royalty in the
amount of two percent of the total capitalization of Rochester
Tel's unregulated operations. The Commission attempted to
justify the royalty on essentially two bases: first, that
ratepayers are entitled to protection from the potential for
cost misallocations and the increased risks that accompany
diversification; and second, that the company's unregulated
operations benefit from their use of the Rochester Telephone
name and reputation. The Commission rejected the company's
statutory and constitutional defenses and concluded that it
possessed the authority under the Public Service Law to impose a
royalty.
<PAGE>
<PAGE>7
Based upon an initial interpretation of the Order,
Rochester Tel estimates that the effect of the Order is in the
range of $2 million per year. The royalty would reduce the
Rochester, New York operating company's revenue requirement for
regulated intrastate telephone operations. The Commission
ordered Rochester Telephone to file an accounting plan for the
royalty amount, together with a plan for returning such amount
to ratepayers. The company vigorously disagrees with the
Commission's determination and has sought judicial review of the
Commission's Opinion and Order. The timing and outcome of the
appeal process cannot be predicted. The company intends to
fully prosecute its appeal in the courts.
During 1993, the company took specific pricing action to
allow it to compete more effectively. The company believes it
must be able to flexibly price its services to be successful in
a competitive marketplace. The Federal Communications
Commission approved the company's request to de-average
interstate access charges between the Rochester, New York
operating company and the combined subsidiary local telephone
companies. This action allowed the company to establish two
sets of rates: one based on the specific costs incurred by the
Rochester, New York operating company; and one based on the
combined cost of the subsidiary local telephone companies, which
primarily serve geographic areas currently less subject to
competition than the Rochester, New York operating company. On
a consolidated basis, the change is initially revenue neutral.
Effective January 1, 1993, the company adopted FAS 106,
"Employers' Accounting for Postretirement Benefits Other than
Pensions," and petitioned the FCC to recover the FAS 106 costs
through the rate-making process. Although the FCC originally
rejected the company's petition, the FCC later allowed the
company to recover the portion of the FAS 106 cost associated
with the Transition Benefit Obligation (the unrecorded
postretirement benefit liability)
<PAGE>
<PAGE>8
amortized over a twenty year period, pending the FCC's
investigation as to whether this cost should be recoverable by
price cap regulated companies. Rates reflecting this expense
went into effect on July 2, 1993. The FCC's investigation
remains pending.
On March 12, 1993, the company signed a definitive
agreement to form a joint venture with New York Cellular
Geographic Service Area, Inc., a subsidiary of NYNEX
Corporation, to create an upstate New York cellular supersystem
that will include the Buffalo, Rochester, Syracuse, Utica-Rome
and NY Rural Service Area #1 markets. The parties have sought a
waiver of the interLATA prohibition contained in the AT&T
consent decree, United States V. American Telephone and
Telegraph Co., 552 F. Supp. 131 (D.D.C. 1982), aff'd mem., 460
U.S. 1001 (1983). Approval on the waiver request is anticipated
in early 1994.
On May 18, 1993, the company filed for approval to form the
joint venture from the New York State Public Service
Commission. This filing included a petition to transfer the
Rochester, New York operating company's interest in the
Rochester wireless cellular business to its wholly-owned
subsidiary, Rochester Tel Mobile Communications Inc. The
Commission approved the entire transaction and transfer at its
open session on November 10, 1993 and issued an order dated
December 10, 1993.
In addition, the joint venture parties filed applications
with the Federal Communications Commission to transfer various
radio licenses associated with the cellular properties and
anticipate that the approvals will be granted in early 1994.
Pending the remaining approvals, Rochester Tel Mobile
Communications, Inc. (RTMC) and NYNEX have signed an agreement
allowing RTMC to manage the combined properties.
<PAGE>
<PAGE>9
Vista Telephone Company of Minnesota filed a request to
increase rates in March 1993 with the Minnesota Public Service
Commission. A stipulated settlement was executed by all parties
and was submitted for approval to the Minnesota Public Service
Commission. The Administrative Law Judge recommended an annual
regulated revenue increase of $4.5 million. The company expects
Commission approval during the first quarter of 1994.
The Vista Telephone Company of Iowa filed in August 1993
for a permanent rate increase of approximately $4.5 million and
a temporary rate increase of $4.1 million. On November 5, 1993,
the Iowa State Utilities Board approved the temporary rate
increase as submitted. This resulted in an approximate 21
percent across-the-board increase in local service rates. A
final order is expected in the second quarter of 1994.
Incentive Regulation
- - - --------------------
The incentive regulation agreement which the New York State
Public Service Commission approved in January 1990 for the
Rochester, New York operating company expired at the end of
1992. The Rochester, New York operating company proposed a new
incentive regulation agreement in January 1993 to the Commission
staff, and reached a settlement, which was approved by the
Commission on January 12, 1994. The settlement reduces the
Rochester, New York operating company's revenue requirement by
$5 million in 1993 and $9.5 million in 1994. Each of these
reductions is subject to adjustment for depreciation changes.
In 1994, fifty percent of the Rochester, New York operating
company's earnings above the authorized return on equity will be
shared with ratepayers. The authorized return is currently
10.9 percent and is subject to adjustment based on the results of the
Generic Financing Proceeding. Also, if the Rochester, New York
operating company's service levels in 1994 drop below 1992
levels, the company will be subject to a penalty of one-half of
one percent of its local service revenues.
<PAGE>
<PAGE>10
Acquisitions and Divestitures
- - - -----------------------------
On April 15, 1993, the company acquired a 70 percent
ownership of the Utica-Rome Cellular Partnership using 702,737
shares of original issue common stock. The transaction was
accounted for as a purchase acquisition. In December 1993, the
company increased its cellular ownership from 50.6 percent to
69.6 percent in the South Alabama cellular partnership. This
later transaction gave the company the right to manage two
cellular properties, Alabama RSA #4 and #6, which serve a
territory with a population of approximately 252,000.
On June 7, 1993, the Telecommunication Services Group
acquired Budget Call Long Distance, Inc. for $7.5 million in
cash. On September 30, 1993, Mid Atlantic Telecom, Inc. was
acquired using 143,587 shares of treasury stock. Both
transactions were accounted for as purchase acquisitions.
Statesboro Telephone Company of Statesboro, Georgia, with
more than 15,000 access lines, was acquired on August 31, 1992.
The transaction was accounted for as a pooling of interests.
During 1991, four telephone companies representing more than
160,000 access lines were acquired. (See Note 2 to the
Consolidated Financial Statements.)
<PAGE>
<PAGE>11
In September 1993, the company sold its interest in the S&A
Telephone Company (824 access lines) and its related minority
cellular interest in a Topeka, Kansas cellular partnership. In
December 1993, the company announced that it had reached a
definitive agreement to sell the Minot Telephone Company in
North Dakota. Minot serves approximately 25,000 access lines
and is the company's only operation in North Dakota. The sale
is subject to regulatory approvals and is expected to be
finalized during the second quarter of 1994. Both transactions
represented the company's only holdings in each state and it was
not expected that our base in those states could be expanded.
The company will continue to pursue opportunities to
increase the size of its long distance, wireless, and telephone
operations through internal growth, acquisitions, partnerships
and joint ventures. Growth in all segments is necessary to
achieve the economies of scale and scope necessary for long-term
success.
<PAGE>
<PAGE>12
FINANCIAL REVIEW
Consolidated Operations
- - - -----------------------
Historically, the company's Telephone Operations have
provided the majority of the overall company's revenues
and income. Telephone Operations provided 66 percent of total
revenues and 84 percent of operating income for the year ended
December 31, 1993. Telephone Operations revenues are derived
from local service and toll access fees, directory advertising,
billing services and other services such as sales of telephone
equipment and voice mail.
An increasing percentage of the
company's revenues and income is being generated by its
Telecommunication Services businesses. Telecommunication
Services revenues include long distance revenues based on
billable minutes of long distance usage, and wireless access and
usage charges. Operating income from the deregulated businesses
represented 16 percent of the company's total operating income
in 1993, compared with just 8 percent five years ago.
The company's Telephone Operations expenses are primarily
related to the development and maintenance of its local exchange
networks. Additional Telephone Operations expenses include
costs associated with customer service and billing. The
company's principal Telecommunication Services expenses are
related to the leasing of transmission facilities and the
payment of local access charges for its long distance business;
and charges for interconnection of cellular and paging
operations with telephone companies, costs of cellular
telephones and paging units sold and other wireless
network-related expenses.
Revenues and expenses derived from the company's
majority-owned cellular operations are currently, and will
continue to be, reflected in the company's consolidated
financial statements. The company's minority interests and,
following its commencement, the proposed 50/50 cellular joint
venture with NYNEX, are accounted for using the equity method.
The company will recognize
<PAGE>
<PAGE>13
its proportional share of the net income (loss) of the cellular
operations following the commencement of the proposed joint
venture with NYNEX in the line item entitled "Equity in net
income (loss) of unconsolidated partnerships and corporations."
Consolidated revenues and sales were $906 million in 1993,
a $102 million, or 12.7 percent increase, over 1992. This
followed a 12.7 percent, or $90.5 million, increase in 1992 over
1991. Of the $102 million increase in 1993, $15 million related
to additional revenues associated with 1993 purchase accounting
acquisitions. Of the $90.5 million increase in 1992, $56.7
million was related to additional revenues associated with 1991
purchase accounting acquisitions. (See Note 2 to the Consolidated
Financial Statements for further details about the purchase
accounting acquisitions.) Excluding the impact of these
acquisitions, revenues and sales rose 10.9 percent in 1993 and
5.2 percent in 1992.
Consolidated costs and expenses were $711.5 million, $628.9
million and $565.2 million in 1993, 1992 and 1991, respectively,
reflecting 13.1 percent and 11.3 percent increases in 1993 and
1992, respectively. Purchase accounting acquisitions accounted
for $16.9 million of the increase in 1993 and $43.7 million in
1992. Consolidated costs and expenses, excluding the impact of
purchase accounting acquisitions, increased 10.4 percent in 1993
and 3.9 percent in 1992. As a result of the company's
continuing focus on cost controls and operating synergies,
consolidated operating margins improved steadily over the past
three years, from 20.8 percent in 1991, to 21.8 percent in 1992
and 21.9 percent in 1993 after excluding the impact of the
software write-off at the Rochester Telephone, New York
operating company.
<PAGE>
<PAGE>14
Telephone Operations
- - - --------------------
Telephone Operations revenues increased $26.6 million to
$593.9 million in 1993 representing an increase of 4.7 percent
over 1992. For 1992 versus 1991, revenues increased 14.0
percent to $567.3 million. Excluding purchase accounting acquisitions,
revenue increased by 4.2 percent in 1992. Revenue growth was
partly driven by robust increases in telephone access lines of
3.9 percent in 1993 and 3.3 percent in 1992. The company's
total access lines in service reached a level of 931,650 by year
end 1993. Growth in long distance usage also contributed
substantially to revenue growth, with minutes of use increasing
by 7.7 percent in 1993 and 18.8 percent in 1992. In general,
the prices charged to long distance companies for access usage
declined slightly to address the telephone operating companies'
need to be competitive in this market sector and are expected to
decline further in 1994.
Local service revenue increased due to rate increases
implemented in 1993 and 1992 at a selected number of non-New
York State telephone companies, offset in part by a regulatory
revenue reduction at the Rochester, New York operating company.
Increased market penetration of enhanced services such as custom
calling features and advanced number identification products
like Caller ID also contributed to revenue growth in 1993 and
1992.
Costs and expenses for Telephone Operations rose $14.4
million in 1993 and $49.4 million in 1992. In 1992, $35.4
million of the increase was related to the incremental costs and
expenses associated with the telephone companies acquired in
1991. Adjusting for these acquisition-related expenses, total
costs and expenses increased 3.8 percent in 1992. The primary
reasons for expense increases in 1993 were: the $3.3 million
write-off of deferred software expenses at the Rochester, New
York operating company; an increase in wages and benefits; an
increase in severance and other expenses associated with
streamlining operations to arrive at a reduced cost structure;
and an increase in right-to-use fees associated with network
<PAGE>
<PAGE>15
software upgrades. In 1992, expenses increased due to higher
depreciation expenses and the amortization of costs associated
with the March 1991 ice storm in Rochester, New York.
Operating margins for Telephone Operations were 27.7
percent in 1993, 26.8 percent in 1992 and 26.5 percent in 1991.
Excluding the write-off of the deferred software expense, the
operating margin in 1993 was 28.2 percent. The composite
depreciation rate for Telephone Operations was 6.2 percent in
1993, compared with 6.4 percent in 1992 and 6.3 percent in
1991. The company continues to pursue alignment of depreciation
rates with the economic lives of depreciable property.
Telecommunication Services
- - - --------------------------
Telecommunication Services sales were $312.6 million in
1993, representing a $75.8 million, or 32 percent, increase over
1992. In 1992, sales increased $20.8 million, or 9.6 percent,
over 1991. Excluding the impact of purchase accounting
acquisitions, sales rose 25.7 percent, or $60.9 million in
1993. The improvements in both years resulted primarily from
the growth in Network Systems and Services, where sales in the
long distance business were $262.5 million in 1993 and $187.3
million in 1992. The growth in long distance revenue is due to
increased usage and market penetration, price increases and new
products. Sales from wireless communications increased $8.5
million, or 40.1 percent, in 1993 and $4.1 million, or 23.9
percent, in 1992 and continue to improve as a result of the
company's acquisition of the Utica-Rome partnership in 1993,
price increases and a growing customer base.
Costs and expenses in 1993 for Telecommunication Services
amounted to $281.9 million, increasing $68.2 million, or 31.9
percent, over 1992. Adjusting for the impact of the 1993
acquisitions, expenses increased by $51.3 million, or 24.0
percent. The increase in expenses is primarily due to the
increased volume of long distance traffic carried by the company
and the associated costs to originate and terminate the traffic
on local telephone company facilities.
<PAGE>
<PAGE>16
The increase in costs and expenses in 1992 over 1991 was
$14.3 million, or 7.2 percent. Normalizing for the impact of
the 1991 acquisitions, costs and expenses rose 4.5 percent,
driven primarily by access costs. These results, which compare
favorably to the increases in sales, produced operating margins
for the three-year period of 7.7 percent in 1991, 9.8 percent in
1992, and 9.8 percent in 1993. This positive trend was achieved
through a continuation of operating synergies, new product
offerings and a growing customer base.
Interest Expense
- - - ----------------
Interest expense decreased $3.5 million, or 7.0 percent, in
1993 as a result of lower debt levels than in 1992. During
1993, the company recalled $115.4 million of debt. In 1992,
interest expense increased $5.5 million, or 12.2 percent,
primarily due to the issuance of new debt in 1991 which was used
to finance acquisitions.
Gain on Sale of Assets
- - - ----------------------
In 1993, the company recognized gains on sales of the S&A
Telephone Company and a portion of the company's minority
investment in a Canadian long distance company. In 1991, the
gain represents the ordinary gain on sale of cellular interests
as part of the purchase of the Vista Minnesota properties from
Centel.
Other Income (Expense), Net
- - - ---------------------------
In 1993, other income (expense), on a net basis increased
$6.9 million, or 47.9 percent, over 1992. This increase is
primarily the result of additional administrative expenses
associated with the reorganization petition filed with the New
York State Public Service Commission, refinancing expenses and
acquisition expenses.
<PAGE>
<PAGE>17
In 1992, the net change was an increase in expense of $3.8
million, or 36.2 percent, over 1991, primarily due to lower
equity earnings in cellular partnerships and increased goodwill
amortization relating to purchase acquisitions.
Income Taxes
- - - ------------
The effective federal tax rate in 1993 was 35.4 percent,
compared to 34.2 percent in 1992 and 35.0 percent in 1991. (See
Note 9 in Notes to the Consolidated Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
===============================
Management's overall objective is to maximize shareowner
value. One of the most important items in evaluating
management's success is its use of the company's financial
resources. While increasing net income is an important
component of the process, management believes that the primary
source of value over the long term is cash generation over and
above investment requirements. Key management decisions are
made based on the value added to our shareowner's investment.
Corporate performance, strategies, capital projects and
acquisitions are evaluated and measured using cash flows and are
expected to provide a return on investment that exceeds the
risk-adjusted cost of capital of the company, or specific
business unit, as appropriate.
Management has three options for the use of excess cash
generated. It can pay dividends, repurchase stock or reinvest
in the business. Key financial data that can be used to monitor
management's progress in maximizing the use of cash are shown
below.
<PAGE>
<PAGE>18
Key Financial Data
($'s in millions, except per share data)
1993 1992 1991
---- ---- ----
Total debt $ 497 $ 591 $ 610
Total capital $1,172 $1,213 $1,214
Debt ratio 42.4% 48.8% 50.2%
Operating margin 21.5% 21.8% 20.8%
Pre-tax interest coverage 3.9x 3.2x 3.9x
Construction $ 102 $ 124 $ 109
Dividends declared per share $ 1.59 $ 1.55 $ 1.51
Dividends paid per share $ 1.58 $ 1.54 $ 1.50
Dividend yield 3.6% 4.4% 4.8%
Dividend payout ratio 65.3% 75.1% 61.7%
Total shareowner return 31.1% 15.7% 15.0%
Year-end stock price $45.13 $35.63 $32.13
As reflected in the Consolidated Statement of Cash Flows, net
cash provided by operating activities increased $12.2 million in 1993,
from $216 million to $228.2 million, and $52.9 million in 1992, from
$163.1 million to $216 million. The increase in both years is the
result of increases in net income, after excluding the 1991 cellular
gains and depreciation and amortization; and in 1992, an increase of
$26.5 million in accounts payable which is directly related to the
timing of purchases associated with the company's construction
program.
<PAGE>
<PAGE>19
Net cash used in investing activities decreased $12.4
million in 1993, from $121.5 million to $109.1 million, and
$148.8 million in 1992, from $270.3 million to $121.5 million.
The decline in 1993 was caused by a reduction in construction
expenditures offset, in part, by an increase in purchase
accounting acquisitions. The decline in 1992 is due primarily
to a $164.6 million decrease in purchase accounting
acquisitions, offset, in part by an increase of $15.3 million in
construction expenditures.
The net cash used in financing activities increased $87.3
million in 1993, from $69.8 million to $157.1 million. Net cash
provided by financing activities amounted to $129.3 million in
1991. The changes in 1992 and 1993 are associated with the
repayment/retirement of long-term debt and the issuance of
$239 million of long-term debt in 1991 to support the
company's acquisition program.
The company's periodic deficit in working capital is
largely driven by its construction program. The timing of plant
additions has a significant impact on the accounts payable
balance until it is refinanced or liquidated using internally
generated funds, as was the case at the end of 1992.
The company must generate adequate amounts of cash to meet
both short-term and long-term needs. The company's liquidity is
a function of its construction program, debt service
requirements, internal generation of funds and access to
securities markets.
On November 30, 1993, the company filed a registration
statement with the Securities and Exchange Commission to sell up
to $100 million of unsecured debt securities. The company
intends to use the proceeds for general corporate purposes which
may include the replacement of debt retired in 1993 and the
financing of possible future acquisitions. At December 31,
1993, no debt had been issued.
<PAGE>
<PAGE>20
On December 21, 1993, the company filed a registration
statement for a public underwritten offering of at least five
million shares of its common stock. Approximately 2.1 million
shares will be sold by the company and the remainder will be
sold by a wholly-owned subsidiary of Sprint Corporation, which
acquired the shares when Rochester Tel purchased several
telephone properties in 1991. The net proceeds from the
offering will be used for general corporate purposes, including
potential expansion of the company's existing lines of business
or investing in new lines of business. The use of the proceeds
is subject to approval by the New York State Public Service
Commission, which approved the issuance of the equity on January
12, 1994. It is expected that the public offering of the equity
will be completed in the first quarter of 1994.
The financing needs associated with telephone company
acquisitions and network modernization programs have
stabilized. The company has in place a switching network that
is essentially 100 percent digital. The company has nearly
27,000 miles of fiber in place with its telephone and long
distance operating territories. The company will continue to
deploy fiber facilities where it is economically justified.
Management will continue to focus on building the profitability
of the existing businesses by increasing revenues and operating
efficiencies, and by partnering or entering into joint ventures
when appropriate. The company will also continue to evaluate
acquisition opportunities and technology deployment such as
multimedia, with a focus on improving shareowner value.
<PAGE>
<PAGE>21
Total gross expenditures for property, plant and equipment
in 1994 are anticipated to be $73.7 million. Telephone
Operations expects to spend $58.3 million on its construction
program and Telecommunication Services, $15.4 million.
At December 31, 1993, aggregate debt maturities were $3.96
million in 1994, $3.66 million in 1995 and $3.75 million in
1996. (See Note 7 to the Consolidated Financial Statements.)
The company's bond ratings remain constant and are strong
investment grade ratings.
Also, on November 15, 1993, the Board of Directors
increased the quarterly dividend paid on common stock by one
cent to $0.405 per share, payable February 1, 1994, to
shareowners of record on January 14, 1994. This action raises
the annualized common stock dividend to $1.62 per share.
<PAGE>
<PAGE>22
Report of Management
- - - --------------------
The integrity and objectivity of the financial information
presented in this Annual Report is the responsibility of the
management of Rochester Telephone Corporation.
The financial statements report on management's
accountability for corporate operations and assets. To this end
management maintains a highly developed system of internal
controls and procedures designed to provide reasonable assurance
that the company's assets are protected and that all
transactions are accounted for in conformity with generally
accepted accounting principles. The system includes documented
policies and guidelines, augmented by a comprehensive program of
internal and independent audits conducted to monitor overall
accuracy of financial information and compliance with
established procedures.
Price Waterhouse, independent accountants, provides an
objective assessment of the degree to which management meets its
responsibility for financial reporting. They regularly evaluate
the system of internal accounting controls and perform such
tests and other procedures they consider necessary to express an
opinion that the financial statements present fairly the
financial position of the company.
Louis L. Massaro
Corporate Vice President-Finance and Treasurer
Report of Audit Committee Chairman
The Audit Committee of the Board of Directors is comprised
of four independent directors who are not officers or employees
of the corporation. The committee oversees the company's
financial reporting process on behalf of the Board of
Directors. The Audit Committee recommends to the Board of
Directors the independent accountants for election by the
shareowners. The committee also meets regularly with management
and the independent accountants and internal auditors to review
accounting, auditing, internal accounting controls, pending
litigation and financial reporting matters. As a matter of
policy, the internal auditors and independent accountants
periodically meet alone with the Audit Committee and have access
to the Audit Committee.
Douglas H. McCorkindale
Chairman, Audit Committee
<PAGE>
<PAGE>23
Report of Independent Accountants
- - - ---------------------------------
To the Shareowners of
Rochester Telephone Corporation
In our opinion, the accompanying consolidated balance
sheets and the related consolidated statements of income,
shareowners' equity and cash flows present fairly, in all
material respects, the financial position of Rochester Telephone
Corporation and its subsidiaries at December 31, 1993, 1992 and
1991, and the results of their operations and their cash flows
for the years then ended in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the company's management; our responsibility
is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 11 to the financial statements, during
the first quarter of 1993 the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions."
January 17, 1994
1900 Chase Square
Rochester, NY 14604
/s/ PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
<PAGE>24
<TABLE>
BUSINESS SEGMENT INFORMATION
<CAPTION>
In thousands of dollars Years ended December 31, 1993 1992 1991
- - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELEPHONE OPERATIONS
Revenues
Local service $ 231,676 $ 214,181 $ 184,872
Network access service 220,196 203,768 166,903
Long distance network service 26,978 29,210 34,999
Directory advertising, billing services, and other 120,459 123,112 115,166
Less: Uncollectibles 5,438 2,999 4,343
- - - -----------------------------------------------------------------------------------------------
Total Revenues $ 593,871 $ 567,272 $ 497,597
================================================================================================
Operating Income $ 164,271 $ 152,032 $ 131,741
================================================================================================
Depreciation $ 99,995 $ 100,692 $ 86,467
================================================================================================
Construction $ 86,479 $ 114,906 $ 98,927
================================================================================================
Identifiable Assets <F1> $1,398,019 $1,416,630 $1,384,875
================================================================================================
TELECOMMUNICATION SERVICES
Sales
Network Systems and Services:
Non-Affiliate $ 282,747 $ 215,633 $ 198,616
Affiliate 6,036 1,511 9,620
Wireless Communications 29,586 21,113 17,038
Eliminations (5,790) (1,480) (9,312)
- - - ------------------------------------------------------------------------------------------------
Total Sales $ 312,579 $ 236,777 $ 215,962
================================================================================================
Operating Income
Network Systems and Services $ 27,344 $ 18,918 $ 13,153
Wireless Communications 3,256 4,110 3,412
Eliminations 74 74 62
- - - ------------------------------------------------------------------------------------------------
Total Operating Income $ 30,674 $ 23,102 $ 16,627
================================================================================================
Depreciation $ 14,816 $ 13,335 $ 12,081
================================================================================================
Construction $ 15,677 $ 8,941 $ 9,657
================================================================================================
Identifiable Assets (1) $ 281,701 $ 191,989 $ 208,308
================================================================================================
<FN>
<F1> Includes intercompany accounts that are eliminated in consolidation of $169,519, $94,722
and $96,446 in 1993, 1992 and 1991, respectively.
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>25
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
In thousands of dollars, except per share data Years ended December 31, 1993 1992 1991
<S> <C> <C> <C>
Revenues and Sales
Telephone Operations $593,871 $567,272 $497,597
Telecommunication Services 312,579 236,777 215,962
- - - --------------------------------------------------------------------------------------------------------------------------
Total Revenues and Sales 906,450 804,049 713,559
- - - --------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Operating expenses 525,488 448,422 402,344
Cost of goods sold 20,819 21,634 20,620
Depreciation 114,811 114,027 98,548
Taxes other than income taxes 47,087 44,832 43,679
Software write-off 3,300 - -
- - - --------------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 711,505 628,915 565,191
- - - --------------------------------------------------------------------------------------------------------------------------
Operating Income 194,945 175,134 148,368
Interest expense 46,550 50,066 44,604
Other income and expense:
Allowance for funds used during construction 1,330 1,309 1,568
Gain on sale of assets 4,449 - 27,561
Other income (expense), net (21,222) (14,347) (10,534)
- - - --------------------------------------------------------------------------------------------------------------------------
Income Before Taxes and Extraordinary Items 132,952 112,030 122,359
Income taxes 50,232 41,527 47,070
- - - --------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Items 82,720 70,503 75,289
Extraordinary items, net of income taxes - (1,072) 3,757
- - - --------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income 82,720 69,431 79,046
Dividends on preferred stock 1,187 1,188 1,189
- - - --------------------------------------------------------------------------------------------------------------------------
Income Applicable to Common Stock $ 81,533 $ 68,243 $ 77,857
==========================================================================================================================
Earnings Per Common Share
Primary:
Income before extraordinary items $ 2.42 $ 2.08 $ 2.31
Extraordinary items - (.03) .12
- - - --------------------------------------------------------------------------------------------------------------------------
Earnings Per Common Share - Primary $ 2.42 $ 2.05 $ 2.43
==========================================================================================================================
Fully Diluted:
Income before extraordinary items $ 2.41 $ 2.07 $ 2.30
Extraordinary items - (.03) .12
- - - --------------------------------------------------------------------------------------------------------------------------
Earnings Per Common Share - Fully Diluted $ 2.41 $ 2.04 $ 2.42
==========================================================================================================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>26
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
In thousands of dollars December 31, 1993 1992 1991
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 31,284 $ 69,347 $ 44,698
Short-term investments 349 634 2,930
Accounts receivable 157,320 133,973 121,576
Material and supplies 11,208 15,892 19,145
Prepayments and other 21,583 21,821 22,607
- - - -------------------------------------------------------------------------------------------------------------
Total Curent Assets 221,744 241,667 210,956
- - - ------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment
Telephone plant in service 1,561,032 1,577,985 1,508,240
Telephone plant under construction 33,048 36,619 28,461
- - - ------------------------------------------------------------------------------------------------------------
1,594,080 1,614,604 1,536,701
Less-Accumulated depreciation 652,578 657,682 594,975
- - - ------------------------------------------------------------------------------------------------------------
Net Telephone Plant 941,502 956,922 941,726
- - - ------------------------------------------------------------------------------------------------------------
Telecommunications property 153,954 140,476 137,365
Less-Accumulated depreciation 68,265 57,723 48,005
- - - ------------------------------------------------------------------------------------------------------------
Net Telecommunications Property 85,689 82,753 89,360
- - - ------------------------------------------------------------------------------------------------------------
Goodwill 166,283 135,964 145,360
- - - ------------------------------------------------------------------------------------------------------------
Deferred and Other Assets 94,983 96,591 109,335
- - - ------------------------------------------------------------------------------------------------------------
Total Assets $1,510,201 $1,513,897 $1,496,737
============================================================================================================
</TABLE>
<PAGE>
<PAGE>27
<TABLE>
CONSOLIDATED BALANCE SHEET CONT.
<CAPTION>
In thousands of dollars December 31, 1993 1992 1991
<S> <C> <C> <C>
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Accounts payable $ 147,152 $ 125,518 $ 100,322
Notes payable 303 6,194 6,010
Advance billings 12,572 12,546 12,474
Dividends payable 14,058 13,462 12,920
Long-term debt due within one year 3,962 59,495 12,284
Taxes accrued 14,729 11,480 25,756
Interest accrued 13,583 16,434 14,817
- - - ------------------------------------------------------------------------------------------------------------
Total Current Liabilities 206,359 245,129 184,583
- - - ------------------------------------------------------------------------------------------------------------
Long-Term Debt 492,555 525,597 591,232
- - - ------------------------------------------------------------------------------------------------------------
Deferred Income Taxes 116,967 118,876 113,973
- - - ------------------------------------------------------------------------------------------------------------
Postretirement Benefits Obligation 16,121 - -
- - - ------------------------------------------------------------------------------------------------------------
Minority interests 3,100 2,701 2,518
- - - ------------------------------------------------------------------------------------------------------------
Shareowners' Equity
Common stock 34,025 33,319 33,323
Capital in excess of par value 201,591 174,226 174,358
Retained earnings 418,889 391,256 373,949
- - - ------------------------------------------------------------------------------------------------------------
654,505 598,801 581,630
Less-Treasury stock, at cost 2,191 - 2
- - - ------------------------------------------------------------------------------------------------------------
Common Shareowners' Equity 652,314 598,801 581,628
Preferred stock 22,785 22,793 22,803
- - - ------------------------------------------------------------------------------------------------------------
Total Shareowners' Equity 675,099 621,594 604,431
- - - ------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $1,510,201 $1,513,897 $1,496,737
============================================================================================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>28
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
In thousands of dollars Years ended December 31, 1993 1992 1991
- - - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Income before extraordinary items $ 82,720 $ 70,503 $ 75,289
Extraordinary items - (1,072) 3,757
- - - --------------------------------------------------------------------------------------------------------
Net income 82,720 69,431 79,046
- - - --------------------------------------------------------------------------------------------------------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and amortization 132,723 121,554 101,499
Gain on sale of assets (4,449) - (27,561)
Extraordinary items - 1,564 (6,187)
Changes in operating assets and liabilities, exclusive
of impacts of purchase acquisitions:
(Increase) decrease in accounts receivable (12,644) (12,822) 2,954
Decrease in material and supplies 4,728 3,253 1,624
Decrease in prepayments and other current assets 229 786 929
(Increase) decrease in deferred and other assets (3,719) 301 (16,126)
Increase in accounts payable 11,516 26,509 5,929
Increase in advance billings 26 72 401
Increase (decrease) in accrued interest and taxes 1,498 (3,182) 8,954
Increase in deferred postretirement benefits obligation 14,302 - -
Increase in deferred income taxes 1,308 8,545 11,663
- - - --------------------------------------------------------------------------------------------------------
Total Adjustments 145,518 146,580 84,079
- - - --------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 228,238 216,011 163,125
- - - --------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Expenditures for property, plant and equipment (102,156) (123,847) (108,584)
Decrease in short-term investments 285 2,296 4,390
Investment in cellular (4,342) (665) (2,220)
Proceeds from sale of investment securities 8,325 684 -
Proceeds from asset sales 1,006 - -
Investment in nonaffiliated entities (1,161) - -
Purchase of companies (11,343) - (164,554)
Cash acquired in purchase acquisitions 264 - 614
- - - --------------------------------------------------------------------------------------------------------
Net Cash (Used in) Investing Activities (109,122) (121,532) (270,354)
- - - --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>29
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS CONT.
<CAPTION>
In thousands of dollars Years ended December 31, 1993 1992 1991
- - - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Financing Activities
Net increase (decrease) in notes payable $ (5,806) $ 184 $ -
Proceeds from long-term debt 35,500 980 239,083
Repayments of long-term debt (130,063) (19,585) (62,319)
Dividends paid (54,492) (51,582) (47,375)
Purchase of treasury stock (2,744) - (625)
Issuance of common stock 35 - -
Redemptions of preferred stock (8) (10) (8)
Minority interests 399 183 523
- - - -------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities (157,179) (69,830) 129,279
- - - -------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (38,063) 24,649 22,050
Cash and Cash Equivalents at Beginning of Year 69,347 44,698 22,648
- - - -------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 31,284 $ 69,347 $ 44,698
=================================================================================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>30
<TABLE>
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
<CAPTION>
In thousands of dollars, except share data 1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock
100,000,000 shares authorized, par value $1.00
Balance, January 1 (shares issued 1993-33,318,943;
1992-33,323,165; 1991-30,436,427) $ 33,319 $ 33,323 $ 30,436
Retirement of treasury stock (1992-63 shares) - - -
Other subsidiary acquisitions (1993-697,623 shares;
1992-4,850 shares; 1991-2,885,000 shares) 698 (5) 2,885
Exercise of stock options (1993-1,109 shares) 1 - -
Conversion of:
4 3/4% Convertible debentures (1993-6,857 shares;
1992-691 shares; 1991-1,738 shares) 7 1 2
- - - -------------------------------------------------------------------------------------------
Balance, December 31 (shares issued
1993-34,024,532; 1992-33,318,943;
1991-33,323,165) 34,025 33,319 33,323
- - - -------------------------------------------------------------------------------------------
Capital in Excess of Par Value
Balance, January 1 174,226 174,358 93,050
Retirement of treasury stock - (2) -
Other subsidiary acquisitions/divestitures 27,259 (137) 81,290
Exercise of stock options 34 - -
Conversion of:
4 3/4% Convertible debentures 72 7 18
- - - -------------------------------------------------------------------------------------------
Balance, December 31 201,591 174,226 174,358
- - - -------------------------------------------------------------------------------------------
Retained Earnings
Balance, January 1 391,256 373,949 343,769
Net income 82,720 69,431 79,046
Dividends declared in cash:
Preferred stock at required annual rates (1,187) (1,188) (1,189)
Common stock (53,900) (50,936) (47,677)
- - - -------------------------------------------------------------------------------------------
Balance, December 31 418,889 391,256 373,949
- - - -------------------------------------------------------------------------------------------
Less-Treasury Stock, at Cost
Balance, January 1
(1992-63; 1991-94,800) - 2 2,575
Common shares repurchased for acquisitions
(1993-304,720; 1991-20,600) 12,572 - 625
Retirement of treasury stock (1992-63) - (2) -
Common shares reissued for acquisitions/divestitures
(1993-248,307; 1991-115,337) (10,381) - (3,198)
- - - -------------------------------------------------------------------------------------------
Balance, December 31 (1993-56,413 shares;
1991-63 shares) 2,191 - 2
- - - -------------------------------------------------------------------------------------------
Common Shareowners' Equity 652,314 598,801 581,628
- - - -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>31
<TABLE>
CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY CONT.
<CAPTION>
In thousands of dollars, except share data 1993 1992 1991
- - - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock
Balance, January 1 (shares outstanding 1993-227,928;
1992-228,025; 1991-228,105) $ 22,793 $ 22,803 $ 22,811
Redemptions (8) (10) (8)
- - - -------------------------------------------------------------------------------------------
Balance, December 31 (shares outstanding 1993-227,848;
1992-227,928; 1991-228,025) 22,785 22,793 22,803
- - - -------------------------------------------------------------------------------------------
Total Shareowners' Equity $675,099 $621,594 $604,431
===========================================================================================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The accounting policies of Rochester Telephone Corporation
and its affiliates (the company) are in conformity with
generally accepted accounting principles and, where applicable,
conform to the accounting principles as prescribed by federal
and various state regulatory bodies.
Consolidation-The consolidated financial statements include
the accounts of Rochester Telephone Corporation and its
affiliates. The results of operations of Rotelcom Inc., RCI
Network Services, Inc., RCI Long Distance, Inc., RCI Long
Distance Canada, Ltd., RCI Long Distance New England, Inc.,
Taconic Long Distance Service Corporation, Mid Atlantic Telecom,
Inc., Budget Call Long Distance, Inc., Rochester Telephone
Mobile Communications (RTMC), a partnership in which the company
is a general partner with an 85 percent interest, Rochester
Telephone Mobile Communications, Inc., and Rochester Tel
Cellular Holding Corporation are disclosed in the Consolidated
Statement of Income and Business Segment Information under the
caption "Telecommunication Services." Intercompany transactions
have been eliminated except for intercompany profit on regulated
company purchases (affiliate sales) from Telecommunication
Services. In the opinion of management, prices charged by
Telecommunication Services are comparable to prices the
regulated companies would be required to pay other suppliers.
Material and Supplies-Material and supplies are stated at the
lower of cost or market, based on weighted average unit cost.
The caption "Cost of Goods Sold" relates to Rotelcom and RTMC
and includes sales associated with the cost of goods sold
amounting to $29.5 million, $32.2 million and $41.1 million in
1993, 1992, and 1991, respectively.
Telephone Plant-Additions to and replacements of telephone
plant are capitalized at original cost, including the costs for
benefits and supervision applicable to construction labor. The
cost of depreciable property units retired, plus removal costs,
less salvage is charged to accumulated depreciation.
Replacements, renewals and betterments of units of property are
capitalized. Replacement of items not considered units of
property and all repairs and maintenance are charged to
operating expense.
<PAGE>
<PAGE>33
Telecommunication Property-Property is recorded at cost.
Improvements that significantly add to productive capacity or
extend useful life are capitalized, while maintenance and
repairs are expensed. Upon retirement or disposal of assets,
the cost and related accumulated depreciation are removed from
the accounts and the gain or loss, if any, is reflected in
earnings for the period.
Depreciation-Depreciation is computed on the straight-line
method using estimated service lives of the various classes of
plant. The range of service lives for property, plant and
equipment is as follows:
Furniture and fixtures 4 to 20 years
Central office, switches and
network equipment 5 to 30 years
Local and toll service lines 27 to 35 years
Station equipment 10 to 15 years
Buildings and building improvements 10 to 35 years
Goodwill-The excess of the cost of companies purchased over
the net assets acquired is being amortized on a straight-line
basis over 25 to 40 years. Accumulated amortization is $15.6
million, $10.4 million and $6.7 million at the end of 1993,
1992, and 1991, respectively.
<PAGE>
<PAGE>34
Service Pensions and Benefits-The company has contributory
and noncontributory plans providing for service pensions and
certain death benefits for substantially all employees. The
plans also provide disability pensions and sickness, accident
and death benefits (resulting from accidents occurring during
employment) for all employees, which are paid and charged to
current operating expense. The company's provisions for service
pensions and certain death benefits are remitted, at least
annually, to the trustees. In addition to providing pension
benefits, the company provides health care, life insurance, and
certain other retirement benefits for substantially all
employees.
Fair Value of Financial Instruments-Cash and cash
equivalents are valued at their carrying amounts, which are
reasonable estimates of fair value. The fair value of long-term
debt is estimated using rates currently available to the company
for debt with similar terms and maturities. The fair value of
all other financial instruments approximates cost as stated.
Federal Income Taxes-The company files a consolidated
federal income tax return.
Tax deferrals resulting from the elimination of gross
profit on affiliate sales in the consolidated tax return are
recorded by Rotelcom and are amortized to offset income taxes to
be paid over the cost recovery periods of telephone plant.
Deferred income taxes are provided by the unregulated
operations on items recognized for financial reporting purposes
in different periods than are recognized for income tax
purposes. Deferred income taxes are recorded by regulated
operations in compliance with the normalization provisions of
current tax law and regulatory orders. The major temporary
differences reflected in the deferred tax liability are
depreciation and investment tax credits. Excess deferred taxes
applicable to Telephone Operations are amortized in compliance
with the normalization provisions of current tax law and
regulatory orders. This amortization is normalized over the
same time period as the related asset generating the deferral.
Deferred income taxes have not been provided by Telephone
Operations for the flow-through of temporary differences where
the regulatory agencies permit only income taxes actually paid
to be recognized. At December 31, 1993, the cumulative balance
of tax reductions not previously offset by provisions for
deferred federal income taxes amounted to $51 million.
Similarly, the cumulative balance of tax reductions not
previously offset by provision for deferred state income taxes
amounted to $15 million at December 31, 1993. A deferred tax
liability and a long-term deferred asset have been recorded to
reflect the impact applicable to these cumulative reductions and
the future revenue to be recovered when these taxes become
payable.
<PAGE>
<PAGE>35
Allowance for Funds Used During Construction-The company
includes in its telephone plant accounts an imputed cost of debt
and equity funds used for the construction of telephone plant
and credits such amounts to other income. The rates used in
determining the allowance for funds used during construction are
based on the assumption that construction funds are provided
from sources of capital in the same proportion as each telephone
company's capital structure.
The rates used to calculate the allowance for funds used
during construction for companies in Telephone Operations during
1993 ranged from 6 percent to 11.96 percent.
<PAGE>
<PAGE>36
Earnings Per Share-Primary earnings applicable to each
share of common stock and common stock equivalent are based on
the weighted average number of shares outstanding during each
year. The average number of common shares outstanding for each
period was: 33,726,719 in 1993, 33,318,952 in 1992 and
32,102,724 in 1991.
Computations of earnings per share on a fully diluted basis
are determined by increasing the average outstanding common
shares for contingent issuances that would reduce earnings per
share. In computing the per share effect of the assumed
conversions, convertible debenture interest (net of income
taxes) has been added to income applicable to common stock. The
number of common shares used to compute earnings per share on a
fully diluted basis for each period was: 33,986,008 in 1993,
33,582,756 in 1992 and 32,367,770 in 1991.
Cash Flows-For purposes of the Statement of Cash Flows, the
company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Actual interest paid was $49.4 million in 1993, $48.4
million in 1992 and $38.9 million in 1991. Actual income taxes
paid were $46.6 million in 1993, $37.2 million in 1992 and $36.8
million in 1991.
Stock Split-In November 1993, the Board of Directors approved
a 2-for-1 split of the common stock of the company effected in
the form of a 100 percent stock dividend with no change in the
$1.00 per share par value. The split will be effective upon
receiving the approval of the New York State Public Service
Commission (NYSPSC) and the listing with the New York Stock
Exchange of the new shares created by the split. The record and
distribution dates will be established after these approvals
have been obtained.
<PAGE>
<PAGE>37
2. Acquisitions
On April 15, 1993, the company acquired 70 percent
ownership of the Utica-Rome Cellular Partnership using 702,737
shares of original issue common stock. The transaction was
accounted for as a purchase accounting acquisition. In
addition, in 1993 Telecommunication Services acquired Budget
Call Long Distance, Inc. on June 7, 1993 for $7.5 million in
cash and Mid Atlantic Telecom, Inc. on September 30, 1993 using
143,587 shares of treasury stock. Both transactions were
accounted for as purchase accounting acquisitions.
During 1992 the company acquired the Statesboro Telephone
Company and accounted for the acquisition as a pooling of
interests. Prior years' financial statements have been restated
to reflect the accounts and operations of the Statesboro
Company. Revenues and net income for the period January 1, 1992
to the acquisition date for Statesboro were $6.1 million and
$1.2 million, respectively. A total of 1.5 million shares of
common stock were exchanged for all of the outstanding stock of
Statesboro.
During 1991 the company acquired six companies. All
acquisitions were accounted for on a purchase accounting basis.
Telephone Operations acquired the telephone properties of
Northern States Power Company, now named Minot Telephone
Company, DePue Telephone Company, the Minnesota telephone
properties of Centel Corporation, now named Vista Telephone
Company of Minnesota, and the Iowa telephone properties of
Centel Corporation, now named Vista Telephone Company of Iowa.
Telecommunication Services acquired the assets of the Burlington
Telephone Company of Burlington, Vermont and Taconic Long
Distance Service Corporation. The purchased companies were
included in the consolidated financial statements as of their
respective dates of acquisition. A total of 2.9 million
original issue shares, 115,000 shares of treasury stock valued
at $3.3 million, $164.6 million in cash and certain minority
ownership interests in cellular properties were exchanged for
the 1991 acquired companies.
<PAGE>
<PAGE>38
3. Other Income (Expense), Net
The major components included in this caption are as follows
(amounts in thousands):
Income (Expense)
---------------------------------
1993 1992 1991
Interest income $ 1,659 $ 2,257 $ 2,279
Joint venture income 727 1,682 1,038
Goodwill amortization (3,928) (3,692) (2,734)
Corporate expenses (14,707) (10,267) (8,178)
Miscellaneous income (expense), net (4,973) (4,327) (2,939)
- - - ------------------------------------------------------------------------------
TOTAL $(21,222) $(14,347) $(10,534)
======== ======== ========
<PAGE>
<PAGE>39
4. Extraordinary and Unusual Items
As part of the Rochester, New York operating company's
Settlement Agreement with the NYSPSC finalized in the third
quarter of 1993, the company agreed to write-off one-half of the
costs ($3.3 million) previously deferred as part of a project to
redesign customer accounts records, order flow and customer
billing systems. The costs were incurred from January 1990 to
December 1992 and the project was abandoned after it was
determined that the cost to complete it was substantially
greater than initially estimated. The remaining one-half of the
costs previously deferred are being amortized to expense and
recovered in rates. This charge is reflected on the
consolidated statement of income in the caption "Software
write-off".
On December 14, 1992, the Executive Committee of the Board
of Directors approved the refinancing of the $40 million Series
H, 9 1/2% first mortgage bonds. The company recorded a charge
of $1.1 million (net of taxes of $.5 million) in 1992 relating
to the write-off of the call premium, the remaining initial
discount and associated expenses of the transaction. The bonds
were retired in January 1993 using internally generated cash and
the private placement of $35 million of debt at a telephone
subsidiary.
The company's 1991 results were positively impacted by a
gain relating to the transfer of cellular properties as part of
the acquisition of Centel Corporation's Minnesota telephone
operations on June 28, 1991. A portion of the gain relating to
the sale of certain cellular properties acquired within two
years prior to the sale is reflected as an extraordinary gain of
$3.8 million (net of taxes of $2.4 million) with the remainder
recorded as an ordinary gain.
<PAGE>
<PAGE>40
5. Stock Option Plans
In 1992 the company implemented a Directors Stock Option Plan and
an Executive Stock Option Plan. Under the plans, which were approved
by shareowners in 1990, the company may issue a maximum of 400,000
shares of common stock over a ten-year period.
Under both plans, the exercise price is the fair market value of the
stock on the date of the grant of the stock option. One third of the
options become exercisable on the first year anniversary of the grant
date. Another third become exercisable on the second year anniversary
and the final third become exercisable on the third year anniversary of
the grant date. The options expire ten years after the date of grant.
Information with respect to options under the above plans follows:
Option Price
Shares Per Share Aggregate
------ ------------ ---------
Outstanding at August 1, 1992 - -
Granted in 1992 48,200 $31.50-$31.375 $1,515,925
------ ----------
Outstanding at December 31, 1992 48,200 1,515,925
Granted in 1993 129,019 $39.50-$36.875 4,935,175
Cancelled in 1993 (4,750) $38.125-$31.50 (176,125)
Exercised in 1993 (1,109) $31.50-$31.375 (34,892)
------- ---------
Outstanding at December 31, 1993 171,360 $6,240,083
======= ==========
At December 31, 1993, 14,806 shares were exercisable and 227,531 shares
were available for future grant.
<PAGE>
<PAGE>41
<TABLE>
6. Preferred Stock (Cumulative)-Par Value $100
<CAPTION>
In thousands of dollars, except share data 1993 1992 1991
- - - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rochester Telephone Corporation-850,000 shares authorized
5.00% Series-redeemable at $101 per share
Shares Outstanding 100,000 100,000 100,000
Amount Outstanding $ 10,000 $ 10,000 $ 10,000
5.65% Series-redeemable at $101 per share
Shares Outstanding 50,000 50,000 50,000
Amount Outstanding $ 5,000 $ 5,000 $ 5,000
4.60% Series-redeemable at $101 per share
Shares Outstanding 50,000 50,000 50,000
Amount Outstanding $ 5,000 $ 5,000 $ 5,000
Highland Telephone Company-40,000 shares authorized
5.875% Series A-redeemable at par
Shares Outstanding 18,694 18,694 18,694
Amount Outstanding $ 1,869 $ 1,869 $ 1,869
7.80% Series B-redeemable at $100.80-$105.00 per share
Shares Outstanding 6,400 6,480 6,560
Amount Outstanding $ 640 $ 648 $ 656
AuSable Valley Telephone Company, Inc.-4,000 shares authorized
5.50% Series-redeemable at par
Shares Outstanding 2,754 2,754 2,754
Amount Outstanding $ 276 $ 276 $ 276
Seneca-Gorham Telephone Corporation-2,500 shares authorized
5.00% Series-redeemable at par
Shares Outstanding - - 17
Amount Outstanding - - $ 2
- - - ----------------------------------------------------------------------------------------------------
Total Shares Outstanding 227,848 227,928 228,025
====================================================================================================
Total Amount Outstanding $ 22,785 $ 22,793 $ 22,803
====================================================================================================
</TABLE>
<PAGE>
<PAGE>42
<TABLE>
7. Long-Term Debt
<CAPTION>
In thousands of dollars At December 31, 1993 1992 1991
- - - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Mortgage Bonds
Series E, 4 3/4%, due September 1, 1993 - $ 12,000 <F1> $ 12,000
Series F, 4 1/2%, due May 1, 1994 - 18,000 <F1> 18,000
Series G, 7 5/8%, due March 1, 2001 - 30,000 <F1> 30,000
Series H, 9 1/2%, due March 1, 2005 - 40,000 <F2> 40,000
Vista Senior Notes, 7.61%, due February 1, 2003 $ 35,000 - -
Rural Electrification Administration debt, 2%-9.1% due 1994 to 2025 80,667 85,048 88,349
Other debt issued by affiliates, 7.5%-12 3/4%, due 1991 to 2006 - 15,840 24,946
- - - ------------------------------------------------------------------------------------------------------------
115,667 <F3> 200,888 213,295
- - - ------------------------------------------------------------------------------------------------------------
Debentures
4 3/4% Convertible, due March 1, 1994 - 137 <F4> 145
10.46% Convertible, due October 27, 2008 5,300 <F5> 5,300 5,300
9%, due January 1, 2020 100,000 100,000 100,000
9%, due August 15, 2021 100,000 100,000 100,000
- - - ------------------------------------------------------------------------------------------------------------
205,300 205,437 205,445
- - - ------------------------------------------------------------------------------------------------------------
Medium-Term Notes, 8.77% - 9.30%, due 1991 to 2004 179,000 179,000 179,000
Revolving Credit and Term Loan Agreement - 3,200 9,400
- - - ------------------------------------------------------------------------------------------------------------
Sub-total 499,967 <F6> 588,525 607,140
Less-Discount on long-term debt, net of premium 3,450 3,433 3,624
Current portion of long-term debt 3,962 59,495 12,284
- - - ------------------------------------------------------------------------------------------------------------
Total Long-Term Debt $492,555 $525,597 $591,232
=============================================================================================================
<FN>
<F1> In July 1993 the company redeemed all of its Series E, F and G First Mortgage Bonds.
<F2> In December 1992, the company entered into an agreement to repurchase its Series H $40 million, 9 1/2%,
First Mortgage Bonds on January 15, 1993. The bonds were originally due March 1, 2005. As such, these bonds
were reclassified from long-term to short-term at December 31, 1992. (See Note 4.)
<F3> Certain assets of Telephone Operations are pledged as security for Mortgage Bonds, Rural
Electrification Administration debt and other debt.
<F4> In December 1992, the company called its 4 3/4% convertible debentures. As such, they have been
reclassified from long-term to short-term at December 31, 1992. The redemption of these debentures occurred
in January 1993. Prior to redemption, debentures were convertible at any time into common stock at $11.50
per share subject to certain adjustments. During 1993, 1992 and 1991, $79,000, $8,000 and $20,000 face value
of debentures were converted into 6,857, 691 and 1,738 shares of common stock, respectively.
<F5> The debenture is convertible into common stock at any time after October 26, 1998 for $21.075 per
share. A total of 251,483 shares of common stock are reserved for such conversion.
<F6> In accordance with Financial Accounting Standards Board Statement No. 107, "Disclosures about Fair
Value of Financial Instruments," the company estimates that the fair value of the debt, based on rates
currently available to the company for debt with similar terms and remaining maturities, is $559.7 million.
</TABLE>
At December 31, 1993, aggregate debt maturities were:
In thousands of dollars 1994 1995 1996 1997 1998
- - - ---------------------------------------------------------------
$3,962 $3,658 $3,746 $3,577 $3,518
<PAGE>
<PAGE>43
8. Notes Payable and Lines of Credit
At December 31, the company had outstanding notes payable as follows:
In thousands of dollars Amount Interest Rate
- - - --------------------------------------------------------------
1991 $ 6,010 5.56% - 7.00%
1992 $ 6,194 4.00% - 9.00%
1993 $ 303 6.00% - 9.00%
Also at December 31, 1993, the company has $50 million of unused
bank lines of credit, which are available to provide support for commercial
paper borrowings. These lines of credit are available for general Corporate
purposes. No compensating balances are required and the commitment fees are not
material. In addition, the Highland Telephone Company has an agreement for an
unsecured line of credit of $8 million. No fees or compensating balances are
required.
<PAGE>
<PAGE>44
<TABLE>
9. Income Taxes
The provision for income taxes consists of the following:
<CAPTION>
In thousands of dollars 1993 1992 1991
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $45,013 $28,394 $31,051
Deferred 391 8,253 9,522
- - - ---------------------------------------------------------------------------------------------------------------
45,404 36,647 40,573
- - - ---------------------------------------------------------------------------------------------------------------
State:
Current 3,911 4,663 5,543
Deferred 917 217 954
- - - ---------------------------------------------------------------------------------------------------------------
4,828 4,880 6,497
- - - ---------------------------------------------------------------------------------------------------------------
Total income taxes $50,232 $41,527 $47,070
===============================================================================================================
</TABLE>
The reconciliation of the federal statutory income tax rate with the effective
income tax rate reflected in the financial statements is as follows:
<TABLE>
<CAPTION>
In thousands of dollars 1993 1992 1991
- - - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income tax expense at statutory rate $44,844 35.0% $36,431 34.0% $39,393 34.0%
Accelerated depreciation 2,656 2.0 2,415 2.3 2,660 2.3
Investment tax credit (2,044) (1.6) (2,223) (2.1) (2,652) (2.3)
Miscellaneous ( 52) - 24 - 1,172 1.0
- - - ---------------------------------------------------------------------------------------------------------------
Total federal income tax $45,404 35.4% $36,647 34.2% $40,573 35.0%
===============================================================================================================
</TABLE>
<PAGE>
<PAGE>45
9. Income Taxes Cont.
As a result of the Revenue Reconciliation Act of 1993, the
1993 Income Tax provision includes the impact of the federal tax
rate increase from 34 percent to 35 percent. The impact amounts
to approximately $2 million, of which approximately $400,000 is
attributable to prior years.
Deferred tax liabilities (assets) are comprised of the following at December
31:
In thousands of dollars 1993 1992
- - - ---------------------------------------------------------------------
Accelerated depreciation $153,910 $152,230
Investment tax credit 6,828 8,047
Miscellaneous 8,734 10,137
- - - ---------------------------------------------------------------------
Gross deferred tax liabilities 169,472 170,414
- - - ---------------------------------------------------------------------
Basis adjustment - purchased telephone companies (42,741) (45,368)
Inventory reserves (113) (883)
Postretirement Benefits Obligation (5,415) -
Deferred compensation (1,648) (1,081)
Other (2,588) (4,206)
- - - ----------------------------------------------------------------------
Gross deferred tax assets (52,505) (51,538)
- - - ----------------------------------------------------------------------
Total Deferred Income Taxes $116,967 $118,876
======================================================================
Gross profit on affiliate sales to telephone companies is deferred by
Telecommunication Services and is amortized to offset income taxes to be paid
over the cost recovery periods of the telephone plant. The amortization of
gross profit deferred in prior years exceeded current year deferrals by
$558,000 in 1993, $927,000 in 1992 and $1,355,000 in 1991 resulting in
deferred tax reversals of $195,000, $315,000 and $461,000, respectively.
<PAGE>
<PAGE>46
10. Service Pensions and Benefits
The company, through various contributory and non-contributory
defined benefit pension plans, provides retirement benefits for
substantially all employees. Benefits, in general, are based on
years-of-service and average salary.
The funded status of the plans is as follows:
In thousands of dollars December 31, 1993 1992 1991
- - - -----------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $283,567 $243,307 $227,317
- - - -----------------------------------------------------------------------------
Accumulated benefit obligation $307,016 $257,893 $242,464
=============================================================================
Plan assets at fair value, primarily fixed
income securities and common stock $397,841 $370,711 $351,498
Projected benefit obligation 354,065 316,335 304,730
- - - -----------------------------------------------------------------------------
Funded status 43,776 54,376 46,768
Unrecognized net (gain) loss (28,729) (42,572) (40,247)
Unrecognized net transition asset (5,442) (4,941) (6,512)
Unrecognized prior service cost 9,227 7,071 12,554
- - - -----------------------------------------------------------------------------
Pension asset included in
Consolidated Balance Sheet $ 18,832 $ 13,934 $ 12,563
=============================================================================
The net periodic pension cost consists of the following:
In thousands of dollars Year Ended December 31, 1993 1992 1991
- - - -----------------------------------------------------------------------------
Service cost-benefits earned during the period $ 7,758 $ 7,033 $ 5,464
Interest cost on projected benefit obligation 23,932 23,123 21,702
Actual return on plan assets (40,484) (24,860) (63,059)
Net amortization and deferral 7,623 (9,033) 37,006
- - - -----------------------------------------------------------------------------
Net periodic pension cost determined under FAS 87 (1,171) (3,737) 1,113
Amount expensed due to regulatory agency actions (1,537) 6,787 2,223
- - - -----------------------------------------------------------------------------
Net periodic pension cost recognized $ (2,708) $ 3,050 $ 3,336
=============================================================================
The projected benefit obligation at December 31, 1993 was determined using
an assumed weighted average discount rate of 7.25 percent and an assumed
weighted average rate of increase in future compensation levels of 5.0
percent. The weighted average expected long-term rate of return on plan
assets was assumed to be 8.75 percent. The unrecognized net transition asset
as of January 1, 1987 is being amortized over the estimated remaining service
lives of employees, ranging from 12 to 26 years.
The company's funding policy is to make contributions for pension benefits
based on actuarial computations which reflect the long-term nature of the
pension plan. However, under Financial Accounting Standards Board Statement
No. 87 (FAS 87), "Employers' Accounting for Pensions," the development of the
projected benefit obligation essentially is computed for financial reporting
purposes and may differ from the actuarial determination for funding due to
varying assumptions and methods of computation.
<PAGE>
<PAGE>47
During 1993, 1992 and 1991, the company funded $.2 million,
$4.8 million and $4.0 million, respectively, for employees'
service pensions and certain death benefits.
The company also sponsors a number of defined contribution
plans. The most significant plan covers substantially all
management employees, who make contributions via payroll
deduction. The company matches 75 percent of that contribution
up to 6 percent of gross compensation. The total cost
recognized for all defined contribution plans during 1993 was
$4.1 million.
On November 30, 1992, a voluntary pension incentive plan
was offered to Rochester, New York operating company employees
who were pension-eligible and retired on or before December 31,
1992. A 7.5 percent additional pension benefit will supplement
the normal pension benefit for up to five years or until age 65,
whichever is earlier. Accordingly, pension costs for the fourth
quarter of 1992 include a one-time charge of $.8 million.
Payments will be made from pension plan assets.
<PAGE>
<PAGE>48
11. Postretirement Benefits Other Than Pensions
The company provides health care, life insurance, and
certain other retirement benefits for substantially all
employees. Effective January 1, 1993, the company adopted
Financial Accounting Standards Board Statement No. 106 (FAS 106)
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." FAS 106 requires that employers reflect in current
expenses an accrual for the cost of providing postretirement
benefits to current and future retirees. Prior to 1993, the
company recognized these costs as they were paid. The cost of
postretirement benefits was recognized as determined under the
projected unit credit actuarial method. Plan assets consist
principally of life insurance policies.
In adopting FAS 106, the company elected to defer the
recognition of the accrued obligation of $125 million over a
period of twenty years. For 1993, the adoption of this standard
resulted in additional operating expenses in the amount of $7.8
million, net of a deferred income tax benefit of $4.1 million.
However, a substantial portion of this increase was offset by a
change in accounting for pensions for rate making purposes at
the Rochester company. The change requires that the company
amortize, over a ten year period, the cumulative amount of
pension funding from January 1, 1987 over the amount of pension
expense which would have been recognized through December 31,
1992 under FAS 87, reducing pension expense throughout the
amortization period. The net impact of adopting FAS 106 and
recording the accounting change for FAS 87 actually resulted in
only $3.8 million of additional operating expenses, net of the
income tax benefit, in 1993.
The funded status of the plans as of December 31, 1993
follows:
Accumulated postretirement benefit
obligation (APBO) attributable to:
Retirees $ 63,749
Fully eligible plan participants 44,399
Other active plan participants 34,892
--------
Total APBO 143,040
Plan Assets at Fair Value 3,944
--------
APBO in Excess of Plan Assets 139,096
Unrecognized Transition Obligation (117,706)
Unrecognized Net Prior Service Cost (1,458)
Unrecognized Net Loss (3,811)
--------
Accrued Postretirement Benefit Obligation $ 16,121
========
<PAGE>
<PAGE>49
The components of the estimated postretirement benefit cost
for 1993 follow:
Service Cost $ 2,746
Interest on Accumulated Postretirement
Benefit Obligation 10,046
Amortization of Transition Obligation 6,241
Return on Plan Assets (290)
-------
Net Postretirement Benefit Cost $18,743
=======
To estimate these costs, health care costs were assumed to
increase 12.0 percent in 1994 with the rate of increase
declining consistently to 5.25 percent by 2006 and thereafter.
The weighted discount rate and salary increase rate were assumed
to be 7.25 percent and 5.0 percent, respectively. The expected
long-term rate of return on plan assets was 7.4 percent. If the
health care cost trend rates were increased by one percentage
point, the accumulated postretirement benefit health care
obligation as of December 31, 1993 would increase by $19.4
million while the sum of the service and interest cost
components of the net postretirement benefit health care cost
for 1993 would increase by $2.1 million.
12. Postemployment Benefits
In 1992 the Financial Accounting Standards Board released
Statement No. 112, "Employers' Accounting for Postemployment
Benefits" (FAS 112), which is required to be implemented by
January 1, 1994. FAS 112 requires that projected future costs
of providing postemployment, but pre-retirement, benefits, such
as disability, pre-pension leave (salary continuation) and
severance pay, be recognized as an expense as employees render
service rather than when the benefits are paid.
The company will adopt the provisions of FAS 112 effective
January 1, 1994 by recognizing its obligation for postemployment
benefits through a cumulative effect charge to net income. This
nonrecurring, noncash charge may reduce 1994's net
income by up to $5.9 million. Adoption of FAS 112 is not
expected to significantly impact future operating expense or the
company's cash flow.
<PAGE>
<PAGE>50
13. Leases and License Agreements
The company leases buildings, land, office space, fiber optic network,
computer hardware and other equipment, and has license agreements for
rights-of-way for the construction and operation of a fiber optic communications
system. Total rental expense amounted to $15.5 million in 1993, $16.4 million
in 1992 and $15.4 million in 1991.
Minimum annual rental commitments under non-cancellable operating leases and
license agreements in effect on December 31, 1993 were as follows:
In thousands of dollars Non-Cancellable Leases License
Years Buildings Equipment Agreements
--------------------------------------------------------------------------
1994 $ 7,600 $ 5,965 $ 5,964
1995 6,955 6,058 6,115
1996 6,670 4,965 6,108
1997 6,425 2,017 6,015
1998 6,129 389 5,846
1999 and thereafter 26,434 3 30,769
--------------------------------------------------------------------------
Total $60,213 $19,397 $60,817
14. Business Segment Information
Revenues and sales, operating income, depreciation, construction and
identifiable assets by business segment are set forth in the Business
Segment Information included on page 24 of this report.
15. Commitments and Contingencies
It is anticipated that the company will expend $73.7 million for
additions to property, plant, and equipment during 1994. In connection
with this construction program, the company has made certain commitments
for the purchase of material and equipment.
<PAGE>
<PAGE>51
The NYSPSC issued an order on July 6, 1993 which imposed a
royalty on Rochester Tel in the amount of two percent of the
total capitalization of Rochester's unregulated operations.
Based upon an initial interpretation of the Order, Rochester
estimates that its effect is in the range of $2.0 million per
year. The company has filed a legal challenge to the
Commission's action on the royalty proposal in the courts. If
ultimately upheld in the courts, the royalty would be treated as
an offset to the Rochester, New York operating company's
regulated revenue requirement from regulated intrastate
telephone operations. The company is vigorously contesting this
case but cannot predict the outcome with any certainty at this
time.
In February 1993, the company filed a petition for
reorganization with the NYSPSC. The request is twofold, first
establishing two new subsidiary companies to be constituted from
the operating assets of the existing Rochester, New York telephone
operating company. One company would be a competitive
telecommunications company which would provide an array of
services on a retail basis in the Rochester marketplace. This
company would have the flexibility to price and introduce
services as necessary to compete. The second company would be a
wholesale network company which would be regulated and would
provide services to the new competitive subsidiary company and
all other telecommunications providers on an equal basis. This
configuration, unique in the telecommunications industry, is
being proposed to better meet the current and emerging
competition in the marketplace.
The second aspect of the petition involves the company's
request to reorganize into a holding company structure. Under
this approach, the company would create a new unregulated parent
holding company for the consolidated organization. This
structure would provide the financing flexibility to continue
acquisition and diversification efforts necessary for the
long-term growth of the business. The company will aggressively
pursue approval of this plan of reorganization but cannot
predict the outcome.
On March 12, 1993, the company signed a definitive
agreement with a subsidiary of NYNEX Corporation to form a
cellular supersystem joint venture in upstate and western New
York State that will provide cellular telephone customers with
expanded geographic coverage. The supersystem will include the
cellular markets in Buffalo, Rochester, Syracuse, Utica-Rome and
New York Rural Service Area #1, which includes Jefferson, St.
Lawrence and Lewis counties. The proposed structure of the
transaction is a 50/50 joint venture partnership, with Rochester
Tel Cellular as the manager. The transaction is expected to
close in the first quarter of 1994, subject to various
governmental approvals and third party consents. On December
21, 1993, the company and NYNEX announced their intention to
include the Binghamton and Elmira areas in the supersystem.
<PAGE>
<PAGE>52
<TABLE>
16. Interim Data (Unaudited)
Selected quarterly data follow:
<CAPTION>
Revenues and Sales Income Per Share
--------------------------------------- ------------------- ------------------------------------
Earnings
Before Market Price
(In thousands of dollars,Telecommunication Telephone Operating Net Extraordinary
except per share data) Services Operations Total Income Income Items Earnings High Low
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993 First Quarter $ 66,395 $144,574 $210,969 $ 44,364 $ 18,018 $ .53 $ .53 $38.88 $34.63
Second Quarter 74,549 148,303 222,852 48,949 19,830 .58 .58 $43.50 $36.50
Third Quarter 82,743 147,763 230,506 48,373 19,237 .56 .56 $48.75 $41.00
Fourth Quarter 88,892 153,231 242,123 53,259 25,635 .75 .75 $50.25 $43.38
-------------------------------------------------------
Full Year $312,579 $593,871 $906,450 $194,945 $ 82,720 $2.42 $2.42
========================================================
1992 First Quarter $ 55,802 $137,708 $193,510 $ 40,412 $ 15,291 $ .45 $ .45 $34.00 $30.13
Second Quarter 57,801 140,677 198,478 43,176 16,518 .49 .49 $33.75 $29.13
Third Quarter 59,478 142,116 201,594 46,118 18,448 .54 .54 $32.88 $30.25
Fourth Quarter 63,696 146,771 210,467 45,428 19,174<F1> .60 .57 $35.75 $30.63
-------------------------------------------------------
Full Year $236,777 $567,272 $804,049 $175,134 $ 69,431 $2.08 $2.05
=======================================================
1991 First Quarter $ 52,865 $109,517 $162,382 $ 32,651 $ 13,327 $ .43 $ .43 $30.38 $26.00
Second Quarter 52,122 114,639 166,761 34,008 31,900<F2> .90 1.02 $31.50 $29.00
Third Quarter 54,875 131,690 186,565 39,069 16,384<F3> .47 .48 $31.38 $28.25
Fourth Quarter 56,100 141,751 197,851 42,640 17,435 .51 .51 $34.00 $29.75
-------------------------------------------------------
Full Year $215,962 $497,597 $713,559 $148,368 $ 79,046 $2.31 $2.43
=======================================================
<FN>
<F1> Includes extraordinary loss on retirement of debt of $1.1 million. (See Note 4.)
<F2> Includes ordinary and extraordinary gain on sale of cellular, net of taxes, of $18.7 million. (See Note 4.)
<F3> Includes ordinary and extraordinary gain on sale of cellular, net of taxes, of $.8 million. (See Note 4.)
</TABLE>
<PAGE>
<PAGE>53
<TABLE>
CONDENSED SIX-YEAR FINANCIAL STATEMENTS
<CAPTION>
In thousands of dollars,
except per share data Years ended December 31, 1993 1992 1991 1990 1989 1988
- - - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
Revenues and sales $ 906,450 $ 804,049 $ 713,559 $ 612,994 $ 590,345 $515,803
Costs and expenses 711,505 628,915 565,191 493,665 474,867 403,803
- - - ---------------------------------------------------------------------------------------------------------------------------------
Operating Income 194,945 175,134 148,368 119,329 115,478 112,000
Interest expense 46,550 50,066 44,604 33,426 27,510 25,387
Other income and expense (15,443) (13,038) 18,595 (3,198) (2,755) 970
Income taxes 50,232 41,527 47,070 30,770 27,827 29,016
- - - ---------------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Items 82,720 70,503 75,289 51,935 57,386 58,567
Extraordinary items - (1,072) 3,757 - 26,558 -
- - - ---------------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income 82,720 69,431 79,046 51,935 83,944 58,567
Dividends on preferred stock 1,187 1,188 1,189 1,192 1,195 1,200
- - - ---------------------------------------------------------------------------------------------------------------------------------
Income Applicable to Common Stock $ 81,533 $ 68,243 $ 77,857 $ 50,743 $ 82,749 $ 57,367
=================================================================================================================================
Earnings Per Common Share:
Primary $ 2.42 $ 2.05 $ 2.43 $ 1.71 $ 2.86 $ 2.00
Fully Diluted $ 2.41 $ 2.04 $ 2.42 $ 1.70 $ 2.83 $ 1.99
=================================================================================================================================
CONSOLIDATED BALANCE SHEET
Current Assets $ 221,744 $ 241,667 $ 210,956 $ 180,175 $ 220,089 $143,022
Property, Plant and Equipment-net 1,027,191 1,039 675 1,031,086 868,288 795,940 745,829
Goodwill 166,283 135,964 145,360 58,933 19,521 13,139
Deferred and Other Assets 94,983 96,591 109,335 91,462 86,597 73,973
- - - ---------------------------------------------------------------------------------------------------------------------------------
Total Assets $1,510,201 $1,513,897 $1,496,737 $1,198,858 $1,122,147 $975,963
=================================================================================================================================
Current Liabilities $ 206,359 $ 245,129 $ 184,583 $ 197,861 $ 161,572 $159,260
Long-Term Debt 492,555 525,597 591,232 363,020 354,302 272,691
Postretirement Benefits Obligation 16,121 - - - - -
Deferred income taxes 116,967 118,876 113,973 148,491 150,879 139,722
Minority interests 3,100 2,701 2,518 1,995 3 -
Shareowners' equity 675,099 621,594 604,431 487,491 455,391 404,290
- - - ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $1,510,201 $1,513,897 $1,496,737 $1,198,858 $1,122,147 $975,963
=================================================================================================================================
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities $ 228,238 $ 216,011 $ 163,125 $ 119,526 $ 100,500 $138,563
Cash flows from investing activities (109,122) (121,532) (270,354) (129,924) (72,051) (91,387)
Cash flows from financing activities (157,179) (69,830) 129,279 (37,941) 21,011 (62,621)
- - - ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents $ (38,063) $ 24,649 $ 22,050 $ (48,339)$ 49,460 $(15,445)
==================================================================================================================================
</TABLE>
<PAGE>
<PAGE>54
<TABLE>
FINANCIAL AND OPERATING STATISTICS
<CAPTION>
Dollars in thousands,
except per share data Years ended December 31, 1993 1992 1991 1990 1989 1988
- - - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Current ratio 1.07 .99 1.13 .90 1.36 .90
Pre-tax interest coverage 3.9x 3.2x 3.9x 3.5x 5.6x 4.5x
Total debt $496,820 $591,286 $609,526 $430,016 $389,894 $313,654
Debt ratio 42.4% 48.8% 50.2% 46.9% 46.1% 43.7%
Common shareowners' equity $652,314 $598,801 $581,628 $464,680 $432,571 $381,359
Rate of return on average common equity 13.0% 11.6% 14.9% 11.3% 20.3% 15.6%
===============================================================================================================================
Construction $102,156 $123,847 $108,584 $109,219 $111,998 $114,199
Percent of funds generated internally 164% 135% 109% 63% 90% 91%
===============================================================================================================================
Common shares outstanding-end of year* 33,968 33,319 33,323 30,342 29,073 28,733
Average common shares outstanding* 33,727 33,319 32,103 29,674 28,966 28,733
Total number of common shareowners 20,759 20,131 18,900 17,164 15,910 16,074
Market price per common share:
High $ 50.25 $ 35.75 $ 34.00 $ 41.50 $ 45.75 $ 25.69
Low $ 34.63 $ 29.13 $ 26.00 $ 24.63 $ 25.69 $ 20.31
End of year $ 45.13 $ 35.63 $ 32.13 $ 29.25 $ 40.50 $ 25.63
===============================================================================================================================
Dividends declared per common share $ 1.590 $ 1.550 $ 1.510 $ 1.470 $ 1.430 $ 1.375
Dividends paid per common share $ 1.580 $ 1.540 $ 1.500 $ 1.460 $ 1.420 $ 1.360
Dividend yield-end of year 3.6% 4.4% 4.8% 5.1% 3.6% 5.5%
===============================================================================================================================
Percent to total Telephone Operations revenues:
Local service 39% 38% 37% 37% 36% 36%
Network access service 37% 36% 34% 31% 28% 31%
Long distance network service 5% 5% 7% 9% 12% 10%
Miscellaneous/uncollectibles 19% 21% 22% 23% 24% 23%
Percent to total Telecommunication Services sales:
Network Services and Systems 91% 91% 92% 94% 94% 92%
Wireless Communications 9% 9% 8% 6% 6% 8%
Operating margin-Telephone Operations 27.7% 26.8% 26.5% 26.3% 27.0% 28.8%
Operating margin-Telecommunication Services 9.8% 9.8% 7.7% 4.9% 5.5% 5.6%
Composite depreciation rate-Telephone Operations 6.2% 6.4% 6.3% 6.3% 5.8% 6.2%
Composite depreciation rate-Telecommunication Services 10.1% 9.6% 9.2% 7.7% 8.7% 8.5%
===============================================================================================================================
Access lines in service-business 262,138 238,643 226,668 181,877 167,584 155,473
Access lines in service-residence 669,512 657,758 641,236 506,812 477,411 462,209
- - - -------------------------------------------------------------------------------------------------------------------------------
Total access lines in service 931,650 896,401 867,904 688,689 644,995 617,682
===============================================================================================================================
Telephone Operations employees 3,444 3,885 3,915 3,251 3,020 2,940
Telecommunication Services employees 932 816 747 750 914 873
- - - -------------------------------------------------------------------------------------------------------------------------------
Total employees 4,376 4,701 4,662 4,001 3,934 3,813
===============================================================================================================================
Carrier access minutes-interstate* 2,004,659 1,890,670 1,569,309 1,233,045 1,140,081 1,019,451
Carrier access minutes-intrastate* 1,504,864 1,369,204 1,173,685 901,376 783,151 706,766
- - - -------------------------------------------------------------------------------------------------------------------------------
Total carrier access minutes* 3,509,523 3,259,874 2,742,994 2,134,421 1,923,232 1,726,217
IntraLATA toll messages* 79,052 77,034 73,854 69,262 66,487 54,339
===============================================================================================================================
*In thousands
</TABLE>
<PAGE>1
EXHIBIT 21
SUBSIDIARIES OF ROCHESTER TELEPHONE CORPORATION
AS OF JANUARY 13, 1994
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
AuSable Valley Telephone New York AuSable Valley Telephone
Company, Inc. Company, Inc.
Breezewood Telephone Company Pennsylvania Breezewood Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Budget Call Long Distance, Inc. Pennsylvania Budget Call Long Distance,
(A wholly-owned subsidiary of Inc.
RCI Long Distance, Inc.) Budget Call Long Distance
Canton Telephone Company Pennsylvania Canton Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
C, C & S Service Corp. Michigan C, C & S Service Corp.
(A wholly-owned subsidiary of
C, C & S Systems, Inc.)
C, C & S Systems, Inc. Michigan C, C & S Systems, Inc.
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
C, C & S Telco, Inc. Michigan C, C & S Telco, Inc.
(A wholly-owned subsidiary of
C, C, & S Systems, Inc.)
Citizens Telephone Company, Inc. Indiana Citizens Telephone
(A wholly-owned subsidiary of Company, Inc.
Rochester Tel Subsidiary
Telco, Inc.)
DePue Communications, Inc. Illinois DePue Communications, Inc.
(A wholly-owned subsidiary of
DePue Telephone Company)
DePue Telephone Company Illinois DePue Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
<PAGE>
<PAGE>2
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Distributed Solutions, Inc. Delaware Distributed Solutions, Inc.
DSI
Enterprise Marketing Services Inc. Pennsylvania Enterprise Marketing Services
(A wholly-owned subsidiary of Inc.
Enterprise Telephone Company)
Enterprise Telephone Company Pennsylvania Enterprise Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Fairmount Telephone Company, Inc. Georgia Fairmount Telephone
(A wholly-owned subsidiary of Company Inc.
Rochester Tel Subsidiary
Telco, Inc.
Fairmount Cellular Inc. Georgia Fairmount Cellular Inc.
(A wholly-owned subsidiary of
Fairmount Telephone Company,
Inc.)
Highland Telephone Company New York Highland Telephone Company
Inland Telephone Company Illinois Inland Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Lakeshore Telephone Company Wisconsin Lakeshore Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.
Lakeside Telephone Company Illinois Lakeside Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Lakewood Telephone Company Pennsylvania Lakewood Rural Telephone
(A wholly-owned subsidiary of Company
Rochester Tel Subsidiary Lakewood Telephone Company
Telco, Inc.)
Lamar Cellular, Inc. Alabama Lamar Cellular, Inc.
(A wholly-owned subsidiary of
Lamar County Telephone
Company, Inc.)
<PAGE>
<PAGE>3
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Lamar County Telephone Alabama Lamar County Telephone
Company, Inc. Company, Inc.
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Long Distance North of New New Hampshire Long Distance North of
Hampshire, Inc. New Hampshire, Inc.
(A wholly-owned subsidiary of
RCI Long Distance New
England, Inc.)
Mid Atlantic Telecom, Inc. Virginia Mid Atlantic Telecom, Inc.
Midland Telephone Company Illinois Midland Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Mid-South Cablevision Company, Inc. Mississippi Mid-South Cablevision
(A wholly-owned subsidiary of Company, Inc.
Rochester Tel Subsidiary
Telco, Inc.)
Mid-South Telephone Company, Inc. Mississippi Mid-South Telephone
(A wholly-owned subsidiary of Company, Inc.
Rochester Tel Subsidiary
Telco, Inc.
Midway Telephone Company Michigan Midway Telephone Company
(A subsidiary of Ontonagon
County Telephone Company)
Minot Telephone Company North Dakota Minot Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Mondovi Telephone Company Wisconsin Mondovi Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Monroeville Telephone Company, Inc. Alabama Monroeville Telephone
(A wholly-owned subsidiary of Company, Inc.
Rochester Tel Subsidiary
Telco, Inc.)
<PAGE>
<PAGE>4
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Montel Cellular Company, Inc. Alabama Montel Cellular Company, Inc.
(A wholly-owned subsidiary of
Monroeville Telephone
Company, Inc.)
Montel Communications, Inc. Alabama Montel Communications, Inc.
(A wholly-owned subsidiary of
Monroeville Telephone
Company, Inc.)
Mt. Pulaski Telephone and Illinois Mt. Pulaski Telephone and
Electric Company Electric Company; Mt.
(A wholly-owned subsidiary of Pulaski Telephone Company
Rochester Tel Subsidiary
Telco, Inc.)
New York Independent Cellular New York NYICS
Systems, Inc. (Part of Utica-Rome
(A wholly-owned subsidiary of Cellular Partnership)
Rochester Tel Telecommunications
Holding Company
New Richmond Cable Company, Inc. Wisconsin New Richmond Cable Company,
(A wholly-owned subsidiary of Inc.
St. Croix Telephone Company)
Oneida County Cellular Systems, New York Oneida County Cellular
Inc. (A wholly-owned subsidiary of (Part of Utica-Rome
Rochester Tel Telecommunications Cellular Parntership)
Holding Company)
Ontonagon Communications, Inc. Michigan Ontonagon Communications,
(A wholly-owned subsidiary of Inc.
Ontonagon County Telephone Company)
Ontonagon County Telephone Company Michigan Ontonagon County Telephone
(A wholly-owned subsidiary of Company
Rochester Tel Subsidiary
Telco, Inc.)
Orion Telephone Exchange Illinois Orion Telephone Exchange
Association Association
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
<PAGE>
<PAGE>5
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Oswayo River Telephone Company Pennsylvania Oswayo River Telephone
(A wholly-owned subsidiary of Company
Rochester Tel Subsidiary
Telco, Inc.)
O. T. Cellular Telephone Company Illinois O. T. Cellular Telephone
(A wholly-owned subsidiary of Company
Orion Telephone Exchange
Association)
PAGECO, Inc. Delaware PAGECO, Inc.
(A wholly-owned subsidiary of
Rochester Tel Cellular
Holding Corporation)
Phoncom Inc. New York Phoncom Inc.
(A wholly owned subsidiary of (Part of Utica-Rome
Rochester Tel Telecommunications Cellular Partnership)
Holding Company)
Prairie Telephone Company Illinois Prairie Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
RCI Long Distance Canada Ltd. Ontario, RCI Long Distance Canada Ltd.
(A wholly-owned subsidiary of Canada
Rochester Tel Telecommunications
Corporation)
RCI Long Distance, Inc. Delaware RCI Long Distance, Inc.
(A wholly-owned subsidiary of Budget Call Long Distance
Rochester Tel Telecommunications Mid Atlantic Telecom
Corporation)
RCI Long Distance New England, Inc. Delaware RCI Long Distance New
(A wholly-owned subsidiary of England, Inc.
Rochester Tel Telecommunications Long Distance North
Corporation) LDN
Mid Atlantic Telecom
Rochester Holding Corporation Delaware Rochester Holding
Corporation
Rochester Tel Business Marketing New York Rochester Tel Business
Corporation Marketing Corporation
(A wholly-owned subsidiary of RTBMC
Rochester Tel Telecommunications Business Marketing
Corporation)
<PAGE>
<PAGE>6
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Rochester Tel Cellular Delaware Rochester Tel Cellular
Holding Corporation Holding Corporation
Rochester Tel Mobile RSA 2, Inc. Delaware Rochester Tel Mobile RSA 2,
(A wholly-owned subsidiary of Inc.
Rochester Tel Cellular
Holding Corporation)
Rochester Telephone Delaware RTMC, Inc.
Mobile Communications, Inc.
Rochester Tel Subsidiary Capital Delaware Rochester Tel Subsidiary
Services Inc. Capital Services Inc.
Rochester Tel Subsidiary Delaware Rochester Tel Subsidiary
Telco, Inc. Telco, Inc.
Rochester Tel Telecommunications Delaware Rochester Tel Telecommuni-
Corporation cations Corporation
(A wholly-owned subsidiary of
Rochester Tel Telecommunications
Holding Corporation)
Rochester Tel Telecommunications Delaware Rochester Tel Telecommuni-
Holding Corporation cations Holding Corporation
Rochester Tel Telecommunications New York Rochester Tel Telecommuni-
Information Services cations Information
Services
Technologies, Inc. Technologies, Inc.
(A wholly-owned subsidiary of RTTIST
Rotelcom Inc.) Rotelcom Data, Inc.
Rotelcom Inc. Delaware Rotelcom Inc.
(A wholly-owned subsidiary of Anixter-Rotelcom
Rochester Tel Telecommunications Rotelcom Network Systems
Corporation SGT Business Systems
RTC Main Street, Inc. Delaware RTC Main Street, Inc.
RTMC Holding, Inc. Delaware RTMC Holding, Inc.
(A wholly-owned subsidiary of
Rochester Tel Cellular Holding
Corporation)
Schuyler Cellular, Inc. Illinois Schuyler Cellular, Inc.
(A wholly-owned subsidiary of
The Schuyler Telephone Company)
<PAGE>
<PAGE>7
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
The Schuyler Telephone Company Illinois Schuyler Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Seneca-Gorham Telephone New York Seneca-Gorham Telephone
Corporation Corporation
St. Croix Telephone Company Wisconsin St. Croix Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Southland Rural Cellular Alabama Southland Rural Cellular
Company, Inc. Company, Inc.
(A wholly-owned subsidiary of
Southland Telephone Company)
Southland Telephone Company Alabama Southland Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
The Statesboro Telephone Company Georgia Statesboro Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Super Com, Inc. Michigan Super Com, Inc.
(A subsidiary of Ontonagon
County Telephone Company)
Superior Communications, Inc. Michigan Superior Communications, Inc.
(A wholly-owned subsidiary of
Ontonagon County Telephone
Company)
Sylvan Lake Telephone Company, Inc. New York Sylvan Lake Telephone
Company, Inc.
Taconic Long Distance Service Corp. New York Taconic Long Distance
(A wholly-owned subsidiary of Service Corp.
Rochester Tel Telecommunications
Corporation)
TDCI, Ltd. Indiana Thorntown Development
(A wholly-owned subsidiary of Company, Inc.
The Thorntown Telephone TDCI, Ltd.
Company, Inc.)
<PAGE>
<PAGE>8
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
The Thorntown Telephone Indiana Thorntown Telephone Company
Company, Inc.
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Urban Telephone Corporation Wisconsin Urban Telephone Corporation
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Vernon Cellular Inc. New York Vernon Cellular Inc.
(A wholly-owned subsidiary of Part of the Utica-Rome
Rochester Tel Telecommunications Cellular Partnership
Holding Company
Viroqua Telephone Company Wisconsin Viroqua Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Visions Inc. Delaware Visions Publishing Inc.
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
Visions Long Distance America Inc. Delaware Visions Long Distance
(A wholly-owned subsidiary of America Inc.
Rochester Tel Subsidiary Minot Telephone Long Distance
Telco, Inc.) Breezewood Tel Long Distance
Canton Tel Long Distance
Vista Tel Long Distance
C,C&S Tel Long Distance
St. Croix Tel Long Distance
Statesboro Tel Long Distance
Visions Long Distance New York Inc. New York Visions Long Distance
(A wholly-owned subsidiary of New York Inc.
Rochester Tel Subsidiary Highland Tel Long Distance
Telco, Inc.) Sylvan Lake Tel Long Distance
AuSable Valley Tel Long
Distance
Vista Telephone Company of Iowa Iowa Vista Telephone Company
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
<PAGE>
<PAGE>9
STATE OF
NAME OF SUBSIDIARY INCORPORATION BUSINESS NAMES USED
Vista Telephone Company Minnesota Vista Telephone Company
of Minnesota
(A wholly-owned subsidiary of
Rochester Tel Subsidiary
Telco, Inc.)
(60ED)
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on
Forms S-3 (File Nos. 33-40824, 33-69420, 33-41397, 33-61784 and
33-51221), Forms S-4 (File Nos. 33-61992 and 33-48421), and
Forms S-8 (File Nos. 33-39213, 33-27118, 33-38307, 33-44473,
33-38310, 33-41307, 33-41306, 33-67430, 33-67432, 33-67324,
33-51331, 33-51885, 33-52025 and 33-52358) of Rochester
Telephone Corporation of our report dated January 17, 1994,
appearing on page 23 of Exhibit No. 13 which is incorporated in
this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 31 of this Form 10-K.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
I, the undersigned, hereby constitute and appoint LOUIS L.
MASSARO as my true and lawful agent and attorney-in-fact to act
with full power and authority and in my name, place and stead
as I, myself, could act for the sole purpose of executing the
Form 10-K of Rochester Telephone Corporation for the year ended
December 31, 1993, pursuant to Instruction D(2)(a) of the Form
10-K and in accordance with Regulation S-K Item 601(b)(24) of
the Securities Act of 1933 and the Securities Exchange Act of
1934, and with full and unqualified authority to delegate such
power to any person or persons as my attorney-in-fact shall
select.
IN WITNESS WHEREOF, THIS INSTRUMENT HAS BEEN SIGNED AND
DELIVERED BY THE UNDERSIGNED AS OF MARCH 21, 1994.
/s/ Patricia C. Barron
--------------------------------
Patricia C. Barron
/s/ Ronald L. Bittner
--------------------------------
Ronald L. Bittner
/s/ John R. Block
--------------------------------
John R. Block
/s/ Harlan D. Calkins
--------------------------------
Harlan D. Calkins
/s/ Brenda E. Edgerton
--------------------------------
Brenda E. Edgerton
/s/ Jairo A. Estrada
--------------------------------
Jairo A. Estrada
--------------------------------
Daniel E. Gill
<PAGE>
<PAGE>2
/s/ Alan C. Hasselwander
--------------------------------
Alan C. Hasselwander
--------------------------------
Wolcott J. Humphrey, Jr.
/s/ Douglas H. McCorkindale
--------------------------------
Douglas H. McCorkindale
/s/ Richard P. Miller, Jr.
--------------------------------
Richard P. Miller, Jr.
/s/ G. Dennis O'Brien
--------------------------------
G. Dennis O'Brien
--------------------------------
Leo J. Thomas
/s/ Michael T. Tomaino
--------------------------------
Michael T. Tomaino
(62ED)
<PAGE>
Exhibit 28.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS PLAN INCLUDING
THE MANAGEMENT OPTIONAL SALARY TREATMENT PLAN
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits
at December 31, 1993 and 1992
Statements of Changes in Net assets Available for
Plan Benefits for the years ended December 31, 1993 and 1992
Notes to Financial Statements
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS
PLAN INCLUDING THE MANAGEMENT
OPTIONAL SALARY TREATMENT PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS PLAN INCLUDING
THE MANAGEMENT OPTIONAL SALARY TREATMENT PLAN
INDEX TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits at December 31, 1993 and
1992
Statements of Changes in Net Assets Available for Plan Benefits for the year
ended December 31, 1993 and 1992
Notes to Financial Statements
* * * * *
(All other schedules are not required or not applicable.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Management
Investment and Savings Plan
Including the Management Optional
Salary Treatment Plan
In our opinion, the accompanying statements of net assets available for
plan benefits and the related statements of changes in net assets
available for plan benefits present fairly, in all material respects, the
financial position of the Rochester Telephone Corporation Management
Investment and Savings Plan including the Management Optional Salary
Treatment Plan at December 31, 1993 and 1992, and the changes in financial
position for the years then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse
Price Waterhouse
<PAGE>
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS PLAN INCLUDING THE MANAGEMENT OPTIONAL
SALARY TREATMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1993
------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Employee contributions receivable $ 70,538 $ 48,186 $ 10,811 $ 10,807 $ 140,342
Rochester Telephone Corporation
Contributions receivable 36,098 13,877 5,058 5,000 60,033
Investment in the Rochester
Telephone Corporation Trust
Fund, at market value 49,705,249 25,342,886 3,603,884 4,342,233 82,994,252
Participant loans $3,792,444 3,792,444
----------- ----------- ---------- ---------- ---------- -----------
49,811,885 25,404,949 3,619,753 4,358,040 3,792,444 86,987,071
----------- ----------- ---------- ---------- ---------- -----------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
----------- ----------- ---------- ---------- ---------- -----------
Net assets available
for plan benefits $49,092,945 $25,681,085 $3,483,687 $4,479,107 $3,792,444 $86,529,268
=========== =========== ========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1992
------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Employee contributions receivable
Rochester Telephone Corporation
Contributions receivable
Investment in the Rochester
Telephone Corporation Trust
Fund, at market value $48,594,692 $19,373,219 $1,908,936 $3,001,365 $72,878,212
Participant loans $3,390,036 3,390,036
----------- ----------- ---------- ---------- ---------- -----------
48,594,692 19,373,219 1,908,936 3,001,365 3,390,036 76,268,248
----------- ----------- ---------- ---------- ---------- -----------
Accrued benefits 122,324 37,314 241 235 160,114
Interfund payable (receivable) 2,552 (2,538) 2,382 (2,396)
----------- ----------- ---------- ---------- ---------- -----------
Net assets available
for plan benefits $48,469,816 $19,338,443 $1,906,313 $3,003,526 $3,390,036 $76,108,134
=========== =========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS PLAN INCLUDING THE MANAGEMENT OPTIONAL SALARY
TREATMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 2,183,372 $ 1,060,853 $ 452,218 $ 414,680 $ 4,111,123
Rochester Telephone
Corporation contributions 1,066,244 488,961 214,056 197,336 1,966,597
Earnings from participation
in Master Trust 3,284,117 5,216,844 286,515 481,713 9,269,189
Rollover contributions from other
plans 27,964 14,095 19,773 13,682 75,514
Participant loans $1,806,075 1,806,075
Participant loan interest income 226,416 226,416
Participant loan repayments 1,266,275 306,426 29,668 29,901 1,632,270
Participant loans terminated
Other income
Transfers from other plans in
Master Trust 22,251 26,692 10,051 10,285 2,187 71,466
Transfers from other funds 451,713 989,157 1,061,992 751,378 3,254,240
----------- ----------- ---------- ---------- ---------- -----------
Total additions 8,301,936 8,103,028 2,074,273 1,898,975 2,034,678 22,412,890
Deductions from net assets attributed to:
Withdrawals 3,762,453 974,023 207,089 353,419 5,296,984
Participant loans 1,250,650 394,800 90,650 69,975 1,806,075
Participant loan repayments 1,632,270 1,632,270
Participant loans terminated
Transfers to Supplemental
Retirement Savings Plan
Transfers to other plans in
Master Trust 2,187 2,187
Transfers to other funds 2,663,517 391,563 199,160 3,254,240
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 7,678,807 1,760,386 496,899 423,394 1,632,270 11,991,756
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 623,129 6,342,642 1,577,374 1,475,581 402,408 10,421,134
Net assets available for plan benefits:
Plan equity, beginning of year 48,469,816 19,338,443 1,906,313 3,003,526 3,390,036 76,108,134
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $49,092,945 $25,681,085 $3,483,687 $4,479,107 $3,792,444 $86,529,268
=========== =========== ========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 2,522,177 $ 936,818 $ 283,176 $ 329,320 $ 4,071,491
Rochester Telephone
Corporation contributions 1,221,799 425,737 137,468 165,760 1,950,764
Earnings from participation
in Master Trust 3,858,298 2,699,389 127,858 135,022 6,820,567
Rollover contributions from other
plans 147,736 124,806 70,111 83,432 426,085
Participant loans $2,072,250 2,072,250
Participant loan interest income
Participant loan repayments 1,006,469 264,087 10,220 12,829 1,293,605
Participant loans terminated 8,350 2,500 550 11,400
Other income 23 1,541 1,564
Transfers from other plans in
Master Trust
Transfers from other funds 298,123 676,264 558,534 554,834 2,087,755
----------- ----------- ---------- ---------- ---------- -----------
Total additions 9,062,975 5,131,142 1,187,917 1,281,197 2,072,250 18,735,481
Deductions from net assets attributed to:
Withdrawals 2,404,667 550,461 11,285 19,954 2,986,367
Participant loans 1,576,550 399,600 51,600 44,500 2,072,250
Participant loan repayments 1,293,605 1,293,605
Participant loans terminated 11,400 11,400
Transfers to Supplemental
Retirement Savings Plan 399 399
Transfers to other plans in
Master Trust
Transfers to other funds 1,592,522 187,491 93,818 213,924 2,087,755
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 5,573,739 1,137,951 156,703 278,378 1,305,005 8,451,776
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 3,489,236 3,993,191 1,031,214 1,002,819 767,245 10,283,705
Net assets available for plan benefits:
Plan equity, beginning of year 44,980,580 15,345,252 875,099 2,000,707 2,622,791 65,824,429
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $48,469,816 $19,338,443 $1,906,313 $3,003,526 $3,390,036 $76,108,134
=========== =========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
MANAGEMENT INVESTMENT AND SAVINGS PLAN
INCLUDING THE MANAGEMENT OPTIONAL SALARY TREATMENT PLAN
NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
The Rochester Telephone Corporation Management Investment and Savings Plan
(MISP) including the Management Optional Salary Treatment Plan (MOST), (the
"Plan") is a defined contribution plan established by the Board of Directors of
Rochester Telephone Corporation (the "Company"). The MOST plan provides
participants the option of having their basic and supplemental contributions to
the Plan made on a salary reduction basis and thus the tax attributes are on a
deferred tax basis. Contributions made under the MISP plan have no deferred tax
attributes. The principal provisions of the plans are described below.
Participation
All salaried employees of Rochester Telephone Corporation and eligible employees
of any affiliated company which has adopted this Plan who are not covered by a
collective bargaining agreement and have completed six months of service are
eligible to participate without regard to age.
Administration of Plan assets
The Plan is administered by the Company's Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plan is Marine Midland Bank, N.A.
Funding policy
The Plan consists of four separate funds. Fund A consists of various group
annuity contracts. Fund B is a stock investment fund consisting of Rochester
Telephone Corporation's common stock. Fund C is the American National Bank
Equity Index Fund, which holds stocks listed on the Standard and Poors 500
Index. Fund D is the Merrill Lynch Capital Fund, a diversified securities fund.
The Plan provides that each participant may voluntarily make a basic
contribution which cannot exceed 6 per cent of their basic pay. Any participant
who contributes the maximum basic contribution may make a supplemental
contribution which, when added to the basic contribution, cannot exceed 16 per
cent of basic pay. In addition, the Company contributes an amount equal to 75
per cent of each participant's basic contribution. All participant
contributions are subject to the limitations set forth in Section 401 of the
current tax code.
A participant may make lump sum MISP contributions at any time during the Plan
year and lump sum MOST contributions during the last three months of the Plan
year. These contributions may be made in addition to or as an alternative to
any salary deduction or salary reduction contribution. A MISP lump sum
contribution may be made by any method approved by the Employees' Benefit
Committee. A MOST lump sum contribution can be made solely pursuant to a salary
reduction agreement between the participant and the Company.
<PAGE>
-2-
Basic and supplemental contributions under the MOST option may be made solely
pursuant to a salary reduction agreement between the participant and the
Company. In addition, basic contributions cannot be divided between the plans.
However, participants can elect to divide supplemental contributions between the
two plans.
Individual accounts which record the participants' basic and supplemental
contributions, the Company's contributions, the earnings on all contributions
and the amount of the participant's interest in each fund are maintained for
each participant. Participants' contributions are allocated directly to their
individual accounts at the time of the contribution. Employer contributions are
allocated to the participant's individual account in accordance with the
specific formula provided in the Plan. Contributions by the Company and the
participants are remitted to the trustee, Marine Midland Bank, N.A., on a
periodic basis. Investment income is allocated proportionately to a
participant's individual account in the proportion that the account bears to the
amounts in all participants' accounts.
Participants have a 100 per cent non-forfeitable vested interest in their
individual accounts at all times.
Participants have an option to invest their contributions and the Company's
contributions on their behalf into any one of the four funds, or in a
combination of the funds in multiples of 10 per cent. Participants' accounts
will reflect the amount invested in each of the four funds.
Individual participant loans
Participant loans cannot exceed the lesser of 50 per cent of the vested amounts
in the participant's account under the Plan or $50,000. A participant may only
have one loan outstanding and the loan is treated as a directed investment by
the borrower with respect to his account. Interest paid on the loan is credited
to the borrower's account and the participant does not share in the income of
the Plan's assets with respect to the amounts borrowed and not yet repaid.
General loans have a term of no more than five years except that a loan may be
granted for a period not to exceed twenty-five years if the proceeds are used to
purchase the participant's principal residence.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Employees' Retirement Savings Plan. The trustee of this new
plan will be the Putnam Fiduciary Trust Company.
Master Trust
Effective January 1, 1992, the Plan investments were transferred into the
Rochester Telephone Corporation Master Trust Fund (Master Trust). The Master
Trust includes five other defined contribution plans of Rochester Telephone
Corporation. The Plan's interest in the net assets of the Master Trust is the
total of the specific interests of the individual participants in the Plan.
<PAGE>
-3-
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in all material respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plan when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plan are paid by the Company.
Valuation of investment assets
Plan assets are valued at fair market value as of the year-end date.
Adjustments for unrealized appreciation or depreciation of such values since the
previous balance sheet date are included in the operating results of the Plan.
Master Trust allocation basis
Investments and investment earnings of the Master Trust are allocated to each of
the plans participating in the Master Trust based on the Plan's proportional
ownership interest as adjusted for contributions and withdrawals made by each
plan.
NOTE 3 - FEDERAL INCOME TAX STATUS:
The Company is in receipt of a determination letter from the Internal Revenue
Service which states that the Plan is a qualified plan exempt from Federal
income taxes under Section 401 of the Internal Revenue Code.
Participants are subject to federal income taxes upon receipt of any Company
contributions or any earnings from the Plan. As more fully described in Note 2,
MOST contributions are in the form of salary reduction and thus the tax
attributes are deferred to the participant, while MISP contributions continue to
have no deferred tax attributes.
<PAGE>
-4-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1993 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 448,073 $ 56,786 $ 41,908 $ 2,375 $ 549,142
Employee contributions receivable 85,337 57,768 17,162 18,424 178,691
Rochester Telephone Corporation contributions
receivable 36,098 13,877 5,058 5,000 60,033
Investments:
Hartford Life Insurance Company Group Annuity
Contracts, at cost - fixed rates of 8.00% with
no specified maturity dates 24,554,791 24,554,791
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15%
to mature at June 1998 5,051,085 5,051,085
New York Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.60% to
mature at June 1998 6,246,893 6,246,893
Prudential Insurance Company of America Group
Annuity Contracts, at cost - fixed rates of
5.19% and 5.97% to mature at June 1997 and
June 1999 7,194,288 7,194,288
John Hancock Mutual Life Insurance Company Group
Annuity, at cost - fixed rate of 5.58% to mature
at June 1998 6,239,801 6,239,801
Metropolitan Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.16% to mature
at December 1997 6,381,425 6,381,425
Common stock of Rochester Telephone Corporation,
at market value:
1993 - 608,963 shares at a cost of $17,047,227 27,479,455 27,479,455
American National Bank Equity Index Fund, at
market value:
1993 - 27,974 shares at a cost of $3,373,962 3,934,575 3,934,575
Merrill Lynch Capital Fund, at market value:
1993 - 161,296 shares at a cost of $4,166,304 4,687,134 4,687,134
Participant loans $3,906,771 3,906,771
----------- ----------- ---------- ---------- ---------- -----------
56,237,791 27,607,886 3,998,703 4,712,933 3,906,771 96,464,084
----------- ----------- ---------- ---------- ---------- -----------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-5-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1992 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 705,732 $ 80,962 $ 39,007 $ 20,564 $ 846,265
Investments:
Hartford Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 8.00% with no
specified maturity date 47,758,093 47,758,093
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15% to
mature at June 1998 4,739,013 4,739,013
Common stock of Rochester Telephone Corporation,
at market value:
1992 - 562,834 shares at a cost of $14,418,106 20,051,064 20,051,064
American National Bank Equity Index Fund,
at market value:
1992 - 15,346 shares at a cost of $1,711,346 1,962,717 1,962,717
Merrill Lynch Capital Fund, at market value:
1992 - 115,477 shares at a cost of $2,891,763 3,040,517 3,040,517
Participant loans $3,405,640 3,405,640
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-6-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 4,146,445 $ 1,800,874 $ 574,198 $ 528,877 $ 7,050,394
Rochester Telephone Corporation contributions 1,205,590 538,458 235,848 212,530 2,192,426
Rollover contributions from other plans 44,033 28,569 44,647 42,575 159,824
Interest and dividend income 3,638,211 933,958 1,134 187,225 $ 252,842 5,013,370
Net appreciation in fair value of participation units 4,718,412 309,275 198,401 5,226,088
Realized (loss) gain (120,036) 348 123,992 4,304
Participant loans 1,916,270 1,916,270
Participant loan repayments 1,292,233 316,179 29,668 29,901 1,667,981
Transfers from other plans in Master Trust 24,438 26,692 10,051 10,285 2,187 73,653
Transfers from other funds 456,072 1,361,626 1,182,052 870,176 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total additions 10,807,022 9,604,732 2,387,221 2,203,962 2,171,299 27,174,236
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 3,865,224 1,018,840 210,829 348,541 5,443,434
Participant loans 1,331,845 423,800 90,650 69,975 1,916,270
Participant loan repayments 1,667,981 1,667,981
Transfers to other plans in Master Trust 62,793 4,602 1,537 2,534 2,187 73,653
Transfers to other funds 3,231,147 405,494 223,292 9,993 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 8,491,009 1,852,736 526,308 431,043 1,670,168 12,971,264
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 2,316,013 7,751,996 1,860,913 1,772,919 501,131 14,202,972
Net assets available for plan benefits:
Plan equity, beginning of year 53,202,838 20,132,026 2,001,724 3,061,081 3,405,640 81,803,309
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-7-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 3,986,094 $ 1,271,074 $ 289,619 $ 338,115 $ 5,884,902
Rochester Telephone Corporation contributions 1,795,958 479,003 164,132 206,331 2,645,424
Rollover contribution from individual plans into
Master Trust 47,875,301 15,543,115 789,747 1,947,856 66,156,019
Rollover contributions from other plans 197,468 202,915 121,189 83,227 604,799
Interest and dividend income 3,972,828 807,862 846 166,758 4,948,294
Net appreciation (depreciation) in fair value of
participation units 1,918,019 134,517 (69,277) 1,983,259
Realized gain 43,533 38,389 81,922
Participant loans $4,976,103 4,976,103
Participant loan repayments 1,223,895 317,793 12,307 16,468 1,570,463
Other income 22 1,541 1,563
Net transfers from other funds 298,123 707,591 560,079 618,925 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total additions 59,349,689 21,292,446 2,072,436 3,346,792 4,976,103 91,037,466
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 2,589,913 548,748 11,045 20,438 3,170,144
Participant loans 1,608,450 411,475 51,275 44,300 2,115,500
Participant loan repayments 1,570,463 1,570,463
Other expenses 1,365 1,365
Transfers to Supplemental Retirement Savings Plan 12,339 1,955 1,496 15,790
Net transfers to other plans 175,810 367 176,177
Net transfers to other funds 1,771,313 187,491 6,437 219,477 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 6,146,851 1,160,420 70,712 285,711 1,570,463 9,234,157
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits:
Plan equity, end of year $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No.
33-39213) of our report dated February 18, 1994, for the Rochester
Telephone Corporation Management Investment and Savings Plan including
the Management Optional Salary Treatment Plan. Such report constitutes
part of this Form 11-K, which appears as Exhibit 28-1 of the Annual
Report of Rochester Telephone Corporation on Form 10-K for the year
ended December 31, 1993.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - I
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits
at December 31, 1993 and 1992
Statements of Changes in Net assets Available for
Plan Benefits for the years ended December 31, 1993 and 1992
Notes to Financial Statements
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
CRAFT SAVINGS PLAN - I
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - I
INDEX TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits at December 31, 1993 and
1992
Statements of Changes in Net Assets Available for Plan Benefits for the years
ended December 31, 1993 and 1992
Notes to Financial Statements
* * * * *
(All other schedules are not required or not applicable.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Craft Savings Plan - I
In our opinion, the accompanying statements of net assets available for
plan benefits, and the related statements of changes in net assets
available for plan benefits present fairly, in all material respects, the
financial position of the Rochester Telephone Corporation Craft Savings
Plan - I at December 31, 1993 and 1992, and the changes in its financial
position for the years then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - I
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------------------- -----------------------------------------
Loan Loan
Fund A Fund B Fund Total Fund A Fund B Fund Total
---------- ---------- ------- ---------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment in the Rochester Telephone
Corporation Master Trust Fund, at
market value $3,211,639 $1,386,897 $4,598,536 $1,961,318 $546,033 $2,507,351
Participant loans $96,898 96,898 $31,213 31,213
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Net assets available for plan benefits $3,211,639 $1,386,897 $96,898 $4,695,434 $1,961,318 $546,033 $31,213 $2,538,564
========== ========== ======= ========== ========== ======== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - I
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------------------- -----------------------------------------
Loan Loan
Fund A Fund B Fund Total Fund A Fund B Fund Total
---------- ---------- ------- ---------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $1,258,389 $ 475,966 $1,734,355 $1,041,478 $262,964 $1,304,442
Rochester Telephone Corporation
contributions 54,207 24,027 78,234
Earnings from participation in Master
Trust 169,367 200,825 370,192 109,501 72,088 181,589
Participant loans $92,620 92,620 $33,450 33,450
Participant loan repayments 21,164 8,535 29,699 5,216 2,305 7,521
Interest income - employee loans 2,764 2,764
Transfers from other funds 164,417 164,417 19,372 19,372
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Total additions 1,503,127 873,770 95,384 2,472,281 1,156,195 356,729 33,450 1,546,374
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Deductions from net assets attributed to:
Withdrawals 14,315 5,397 19,712
Participant loans 67,595 25,025 92,620 23,450 10,000 33,450
Participant loan repayments 29,699 29,699 7,521 7,521
Transfer to other plans in Master Trust 6,479 2,484 8,963
Transfers to other funds 164,417 164,417 19,372 19,372
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Total deductions 252,806 32,906 29,699 315,411 42,822 10,000 7,521 60,343
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Increase in net assets 1,250,321 840,864 65,685 2,156,870 1,113,373 346,729 25,929 1,486,031
Net assets available for plan benefits:
Plan equity, beginning of year 1,961,318 546,033 31,213 2,538,564 847,945 199,304 5,284 1,052,533
---------- ---------- ------- ---------- ---------- -------- ------- ----------
Plan equity, end of year $3,211,639 $1,386,897 $96,898 $4,695,434 $1,961,318 $546,033 $31,213 $2,538,564
========== ========== ======= ========== ========== ======== ======= ==========
</TABLE>
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - I
NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
The Rochester Telephone Corporation Craft Savings Plan - I (the "Plan") is a
defined contribution plan established by the Board of Directors of the Rochester
Telephone Corporation (the "Company") effective December 19, 1990. The plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan provides participants the option of having their basic and
supplemental contributions to the Plan made on a salary reduction basis and thus
the tax attributes are on a deferred tax basis. The principal provisions of the
Plan are described below.
Participation
All employees of the Company who are in the Communications Workers of America
(CWA), AFL-CIO, Local 1170 bargaining unit and who have been employed for at
least one year are eligible to participate in the Plan upon reaching age 21.
Administration
The Plan is administered by the Company's Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plan is Marine Midland Bank, N.A.
Funding policy
The Plan consists of two separate funds. Fund A consists of various group
annuity contracts. Fund B is a stock investment fund consisting of Rochester
Telephone Corporation's common stock.
The Plan provides that each participant may voluntarily make contributions
through a salary reduction agreement for whatever whole percentage a participant
chooses, up to a maximum of 16 per cent, subject to maximum contribution
provisions imposed by the Internal Revenue Code under Section 401(k).
Individual accounts which record the participants' contributions, the earnings
on all contributions and the amount of the participant's interest in each fund
are maintained for each participant. The participants' contributions during a
month are allocated directly to their individual account at the end of such
month. Participants have the option to invest their contributions into either
of the funds, or in both of the funds in multiples of 25%. Participants have a
100% non-forfeitable interest in their individual accounts at all times.
<PAGE>
-2-
Individual participant loans
Participant loans cannot exceed the lesser of 50% of the vested amounts in the
participant's account under the Plan or $50,000. A participant may only have
one loan outstanding and the loan is treated as a directed investment by the
borrower with respect to his account. Interest paid on the loan is credited to
the borrower's account and the participant does not share in the income of the
Plan's assets with respect to the amounts borrowed and not yet repaid. General
loans have a term of no more than five years except that a loan may be granted
for a period not to exceed twenty-five years if the proceeds are used to
purchase the participant's principal residence.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Bargaining Unit Employees' Retirement Savings Plan. The
trustee of this new plan will be the Putnam Fiduciary Trust Company.
Plan amendment
Effective July 1, 1993, the Plan was amended to allow the Company to contribute
an amount equal to 15% of each participant's contribution. This matching
percentage increases to 20% effective July 1, 1994 and to 30% effective January
1, 1995.
Master Trust
Effective January 1, 1992, the Plan investments were transferred into the
Rochester Telephone Corporation Master Trust Fund (Master Trust). The Master
Trust includes five other defined contribution plans of Rochester Telephone
Corporation. The Plan's interest in the net assets of the Master Trust is the
total of the specific interests of the individual participants in the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in all material respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plan when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plan are paid by the Company.
<PAGE>
-3-
Valuation of investment assets
Plan assets are valued at fair market value as of the year-end date.
Adjustments for unrealized appreciation or depreciation of such values are
included in the operating results of the Plan.
Master Trust allocation basis
Investments and investment earnings of the Master Trust are allocated to each of
the plans participating in the Master Trust based on the plan's proportional
ownership interest as adjusted for contributions and withdrawals made by each
plan.
NOTE 3 - FEDERAL INCOME TAX STATUS:
A determination letter from the Internal Revenue Service has not yet been
received; however, the Company believes that the Plan is a qualified plan exempt
from federal income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
-4-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1993 is as follows:
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 448,073 $ 56,786 $ 41,908 $ 2,375 $ 549,142
Employee contributions receivable 85,337 57,768 17,162 18,424 178,691
Rochester Telephone Corporation
contributions receivable 36,098 13,877 5,058 5,000 60,033
Investments:
Hartford Life Insurance Company
Group Annuity Contracts, at
cost - fixed rates of 8.00%
with no specified maturity
dates 24,554,791 24,554,791
Principal Mutual Life Insurance
Company Group Annuity Contract,
at cost - fixed rate of 7.15%
to mature at June 1998 5,051,085 5,051,085
New York Life Insurance Company
Group Annuity Contract, at cost -
fixed rate of 5.60% to mature at
June 1998 6,246,893 6,246,893
Prudential Insurance Company of
America Group Annuity Contracts,
at cost - fixed rates of 5.19%
and 5.97% to mature at June 1997
and June 1999 7,194,288 7,194,288
John Hancock Mutual Life Insurance
Company Group Annuity, at cost -
fixed rate of 5.58% to mature at
June 1998 6,239,801 6,239,801
Metropolitan Life Insurance Company
Group Annuity Contract, at cost -
fixed rate of 5.16% to mature at
December 1997 6,381,425 6,381,425
Common stock of Rochester Telephone
Corporation, at market value: 1993 -
608,963 shares at a cost of $17,047,227 27,479,455 27,479,455
American National Bank Equity Index
Fund, at market value: 1993 - 27,974
shares at a cost of $3,373,962 3,934,575 3,934,575
Merrill Lynch Capital Fund, at market
value: 1993 - 161,296 shares at a
cost of $4,166,304 4,687,134 4,687,134
Participant loans $3,906,771 3,906,771
----------- ----------- ---------- ---------- ---------- -----------
56,237,791 27,607,886 3,998,703 4,712,933 3,906,771 96,464,084
----------- ----------- ---------- ---------- ---------- -----------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-5-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1992 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 705,732 $ 80,962 $ 39,007 $ 20,564 $ 846,265
Investments:
Hartford Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 8.00% with no
specified maturity date 47,758,093 47,758,093
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15% to
mature at June 1998 4,739,013 4,739,013
Common stock of Rochester Telephone Corporation,
at market value:
1992 - 562,834 shares at a cost of $14,418,106 20,051,064 20,051,064
American National Bank Equity Index Fund,
at market value:
1992 - 15,346 shares at a cost of $1,711,346 1,962,717 1,962,717
Merrill Lynch Capital Fund, at market value:
1992 - 115,477 shares at a cost of $2,891,763 3,040,517 3,040,517
Participant loans $3,405,640 3,405,640
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-6-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 4,146,445 $ 1,800,874 $ 574,198 $ 528,877 $ 7,050,394
Rochester Telephone Corporation contributions 1,205,590 538,458 235,848 212,530 2,192,426
Rollover contributions from other plans 44,033 28,569 44,647 42,575 159,824
Interest and dividend income 3,638,211 933,958 1,134 187,225 $ 252,842 5,013,370
Net appreciation in fair value of participation units 4,718,412 309,275 198,401 5,226,088
Realized (loss) gain (120,036) 348 123,992 4,304
Participant loans 1,916,270 1,916,270
Participant loan repayments 1,292,233 316,179 29,668 29,901 1,667,981
Transfers from other plans in Master Trust 24,438 26,692 10,051 10,285 2,187 73,653
Transfers from other funds 456,072 1,361,626 1,182,052 870,176 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total additions 10,807,022 9,604,732 2,387,221 2,203,962 2,171,299 27,174,236
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 3,865,224 1,018,840 210,829 348,541 5,443,434
Participant loans 1,331,845 423,800 90,650 69,975 1,916,270
Participant loan repayments 1,667,981 1,667,981
Transfers to other plans in Master Trust 62,793 4,602 1,537 2,534 2,187 73,653
Transfers to other funds 3,231,147 405,494 223,292 9,993 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 8,491,009 1,852,736 526,308 431,043 1,670,168 12,971,264
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 2,316,013 7,751,996 1,860,913 1,772,919 501,131 14,202,972
Net assets available for plan benefits:
Plan equity, beginning of year 53,202,838 20,132,026 2,001,724 3,061,081 3,405,640 81,803,309
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-7-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 3,986,094 $ 1,271,074 $ 289,619 $ 338,115 $ 5,884,902
Rochester Telephone Corporation contributions 1,795,958 479,003 164,132 206,331 2,645,424
Rollover contribution from individual plans into
Master Trust 47,875,301 15,543,115 789,747 1,947,856 66,156,019
Rollover contributions from other plans 197,468 202,915 121,189 83,227 604,799
Interest and dividend income 3,972,828 807,862 846 166,758 4,948,294
Net appreciation (depreciation) in fair value of
participation units 1,918,019 134,517 (69,277) 1,983,259
Realized gain 43,533 38,389 81,922
Participant loans $4,976,103 4,976,103
Participant loan repayments 1,223,895 317,793 12,307 16,468 1,570,463
Other income 22 1,541 1,563
Net transfers from other funds 298,123 707,591 560,079 618,925 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total additions 59,349,689 21,292,446 2,072,436 3,346,792 4,976,103 91,037,466
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 2,589,913 548,748 11,045 20,438 3,170,144
Participant loans 1,608,450 411,475 51,275 44,300 2,115,500
Participant loan repayments 1,570,463 1,570,463
Other expenses 1,365 1,365
Transfers to Supplemental Retirement Savings Plan 12,339 1,955 1,496 15,790
Net transfers to other plans 175,810 367 176,177
Net transfers to other funds 1,771,313 187,491 6,437 219,477 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 6,146,851 1,160,420 70,712 285,711 1,570,463 9,234,157
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits:
Plan equity, end of year $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No.
33-38307) of our report dated February 18, 1994, for the Rochester
Telephone Corporation Craft Savings Plan - I. Such report constitutes
part of this Form 11-K, which appears as Exhibit 28-2 of the Annual
Report of Rochester Telephone Corporation on Form 10-K for the year
ended December 31, 1993.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - II
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits
at December 31, 1993 and 1992
Statements of Changes in Net assets Available for
Plan Benefits for the years ended December 31, 1993 and 1992
Notes to Financial Statements
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
CRAFT SAVINGS PLAN - II
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - II
INDEX TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits at December 31, 1993 and
1992
Statements of Changes in Net Assets Available for Plan Benefits for the year
ended December 31, 1993 and 1992
Notes to Financial Statements
* * * * *
(All other schedules are not required or not applicable.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Craft Savings Plan - II
In our opinion, the accompanying statements of net assets available for
plan benefits, and the related statements of changes in net assets
available for plan benefits present fairly, in all material respects, the
financial position of the Rochester Telephone Corporation Craft Savings
Plan - II at December 31, 1993 and 1992, and the changes in its financial
position for the years then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - II
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------------- ------------------------------------
Loan Loan
Fund A Fund B Fund Total Fund A Fund B Fund Total
------ ------ ---- ------- ------- ------ ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment in the Rochester Telephone
Corporation Master Trust Fund, at
market value $463,193 $154,137 $617,330 $197,806 $53,237 $251,043
Participant loans $17,429 17,429 $7,610 7,610
-------- -------- ------- -------- -------- ------- ------ --------
Net assets available for Plan benefits $463,193 $154,137 $17,429 $634,759 $197,806 $53,237 $7,610 $258,653
======== ======== ======= ======== ======== ======= ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - II
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------------- ------------------------------------
Loan Loan
Fund A Fund B Fund Total Fund A Fund B Fund Total
-------- ------- ------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $275,852 $ 83,536 $359,388 $189,602 $41,410 $231,012
Earnings from participation in
Master Trust 21,066 20,539 41,605 7,347 6,372 13,719
Participant loans $17,575 17,575 $7,950 7,950
Participant loan repayments 4,794 1,218 6,012 282 58 340
Interest income - employee loans 443 443
Transfers from other plans in Master Trust 2,187 2,187
Rollover contributions from other plans 9,000 6,789 15,789
Transfers from other funds 2,967 2,967
-------- -------- ------- -------- -------- ------- ------ --------
Total additions 303,899 108,260 18,018 430,177 206,231 54,629 7,950 268,810
-------- -------- ------- -------- -------- ------- ------ --------
Deductions from net assets attributed to:
Withdrawals 2,976 2,476 5,452 508 508
Participant loans 13,600 3,975 17,575 6,925 1,025 7,950
Participant loan repayments 6,012 6,012 340 340
Transfers to other plans in Master Trust 18,969 909 2,187 22,065 992 367 1,359
Transfers to other funds 2,967 2,967
-------- -------- ------- -------- -------- ------- ------ --------
Total deductions 38,512 7,360 8,199 54,071 8,425 1,392 340 10,157
-------- -------- ------- -------- -------- ------- ------ --------
Increase in net assets 265,387 100,900 9,819 376,106 197,806 53,237 7,610 258,653
Net assets available for plan benefits:
Plan equity, beginning of year 197,806 53,237 7,610 258,653
-------- -------- ------- -------- -------- ------- ------ --------
Plan equity, end of year $463,193 $154,137 $17,429 $634,759 $197,806 $53,237 $7,610 $258,653
======== ======== ======= ======== ======== ======= ====== ========
</TABLE>
This accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
CRAFT SAVINGS PLAN - II
NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
The Rochester Telephone Corporation Craft Savings Plan - II (the "Plan") is a
defined contribution plan established by the Board of Directors of the Rochester
Telephone Corporation (the "Company") effective January 1, 1992. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The Plan provides participants the option of having their basic and
supplemental contributions to the Plan made on a salary reduction basis and thus
the tax attributes are on a deferred tax basis. The principal provisions of the
Plan are described below.
Participation
All employees of the Company who are in the Rochester Telephone Workers'
Association (RTWA) and who have been employed for at least one year are eligible
to participate in the Plan upon reaching age 21.
Administration
The Plan is administered by the Company's Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plan is Marine Midland Bank, N.A.
Funding policy
The Plan consists of two separate funds. Fund A consists of various group
annuity contracts. Fund B is a stock investment fund consisting of Rochester
Telephone Corporation's common stock.
The Plan provides that each participant may voluntarily make contributions
through a salary reduction agreement for whatever whole percentage a participant
chooses, up to a maximum of 16%, subject to maximum contribution provisions
imposed by the Internal Revenue Code under Section 401(k). Rochester Telephone
Corporation does not contribute to this Plan except to the extent of
transmitting contributions to the trustee.
Individual accounts which record the participant's contributions, the earnings
on all contributions and the amount of the participant's interest in each fund
are maintained for each participant. The participants' contributions during a
month are allocated directly to their individual account at the end of such
month. Participants have the option to invest their contributions into either
of the funds, or in both of the funds in multiples of 25%. Participants have a
100% per cent non-forfeitable interest in their individual accounts at all
times.
<PAGE>
-2-
Individual participant loans
Participant loans cannot exceed the lesser of 50% of the vested amounts in the
participant's account under the Plan or $50,000. A participant may only have
one loan outstanding and the loan is treated as a directed investment by the
borrower with respect to his account. Interest paid on the loan is credited to
the borrower's account and the participant does not share in the income of the
Plan's assets with respect to the amounts borrowed and not yet repaid. General
loans have a term of no more than five years except that a loan may be granted
for a period not to exceed twenty-five years if the proceeds are used to
purchase the participant's principal residence.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Bargaining Unit Employees' Retirement Savings Plan. The
trustee of this new plan will be the Putnam Fiduciary Trust Company.
Master Trust
The Plan investments are included in the Rochester Telephone Corporation Master
Trust Fund (Master Trust) with five other deferred contribution plans of
Rochester Telephone Corporation. The Plan's interest in the net assets of the
Master Trust is the total of the specific interests of the individual
participants in the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in all material respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plan when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plan are paid by the Company.
Valuation of investment assets
Plan assets are valued at fair market value as of the year-end date.
Adjustments for unrealized appreciation or depreciation of such values are
included in the operating results of the Plan.
<PAGE>
-3-
Master Trust allocation basis
Investments and investment earnings of the Master Trust are allocated to each of
the plans participating in the Master Trust based on the plan's proportional
ownership interest as adjusted for contributions and withdrawals made by each
plan.
NOTE 3 - FEDERAL INCOME TAX STATUS:
A determination letter from the Internal Revenue Service has not yet been
received; however, the Company believes that the Plan is a qualified plan exempt
from federal income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
-4-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1993 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
---------------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 448,073 $ 56,786 $ 41,908 $ 2,375 $ 549,142
Employee contributions receivable 85,337 57,768 17,162 18,424 178,691
Rochester Telephone
Corporation contributions receivable 36,098 13,877 5,058 5,000 60,033
Investments:
Hartford Life Insurance Company Group Annuity
Contracts, at cost - fixed rates of 8.00% with
no specified maturity dates 24,554,791 24,554,791
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15%
to mature at June 1998 5,051,085 5,051,085
New York Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.60% to mature
at June 1998 6,246,893 6,246,893
Prudential Insurance Company of America Group
Annuity Contracts, at cost - fixed rates of 5.19%
and 5.97% to mature at June 1997 and June 1999 7,194,288 7,194,288
John Hancock Mutual Life Insurance Company Group
Annuity, at cost - fixed rate of 5.58% to mature
at June 1998 6,239,801 6,239,801
Metropolitan Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.16% to mature
at December 1997 6,381,425 6,381,425
Common stock of Rochester Telephone Corporation,
at market value: 1993 - 608,963 shares at a cost
of $17,047,227 27,479,455 27,479,455
American National Bank Equity Index Fund, at
market value: 1993 - 27,974 shares at a cost
of $3,373,962 3,934,575 3,934,575
Merrill Lynch Capital Fund, at market value:
1993 - 161,296 shares at a cost of $4,166,304 4,687,134 4,687,134
Participant loans $3,906,771 3,906,771
----------- ----------- ---------- ---------- ---------- -----------
56,237,791 27,607,886 3,998,703 4,712,933 3,906,771 96,464,084
----------- ----------- ---------- ---------- ---------- -----------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-5-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1992 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
---------- ---------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 705,732 $ 80,962 $ 39,007 $ 20,564 $ 846,265
Investments:
Hartford Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 8.00% with
no specified maturity date 47,758,093 47,758,093
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15%
to mature at June 1998 4,739,013 4,739,013
Common stock of Rochester Telephone Corporation,
at market value:
1992 - 562,834 shares at a cost of
$14,418,106 20,051,064 20,051,064
American National Bank Equity Index Fund,
at market value:
1992 - 15,346 shares at a cost of $1,711,346 1,962,717 1,962,717
Merrill Lynch Capital Fund, at market value:
1992 - 115,477 shares at a cost of $2,891,763 3,040,517 3,040,517
Participant loans $3,405,640 3,405,640
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-6-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
--------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
---------- ----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 4,146,445 $ 1,800,874 $ 574,198 $ 528,877 $ 7,050,394
Rochester Telephone Corporation contributions 1,205,590 538,458 235,848 212,530 2,192,426
Rollover contributions from other plans 44,033 28,569 44,647 42,575 159,824
Interest and dividend income 3,638,211 933,958 1,134 187,225 $ 252,842 5,013,370
Net appreciation in fair value of participation units 4,718,412 309,275 198,401 5,226,088
Realized (loss) gain (120,036) 348 123,992 4,304
Participant loans 1,916,270 1,916,270
Participant loan repayments 1,292,233 316,179 29,668 29,901 1,667,981
Transfers from other plans in Master Trust 24,438 26,692 10,051 10,285 2,187 73,653
Transfers from other funds 456,072 1,361,626 1,182,052 870,176 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total additions 10,807,022 9,604,732 2,387,221 2,203,962 2,171,299 27,174,236
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 3,865,224 1,018,840 210,829 348,541 5,443,434
Participant loans 1,331,845 423,800 90,650 69,975 1,916,270
Participant loan repayments 1,667,981 1,667,981
Transfers to other plans in Master Trust 62,793 4,602 1,537 2,534 2,187 73,653
Transfers to other funds 3,231,147 405,494 223,292 9,993 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 8,491,009 1,852,736 526,308 431,043 1,670,168 12,971,264
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 2,316,013 7,751,996 1,860,913 1,772,919 501,131 14,202,972
Net assets available for plan benefits:
Plan equity, beginning of year 53,202,838 20,132,026 2,001,724 3,061,081 3,405,640 81,803,309
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-7-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
--------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 3,986,094 $ 1,271,074 $ 289,619 $ 338,115 $ 5,884,902
Rochester Telephone Corporation contributions 1,795,958 479,003 164,132 206,331 2,645,424
Rollover contribution from individual plans into
Master Trust 47,875,301 15,543,115 789,747 1,947,856 66,156,019
Rollover contributions from other plans 197,468 202,915 121,189 83,227 604,799
Interest and dividend income 3,972,828 807,862 846 166,758 4,948,294
Net appreciation (depreciation) in fair value of
participation units 1,918,019 134,517 (69,277) 1,983,259
Realized gain 43,533 38,389 81,922
Participant loans $4,976,103 4,976,103
Participant loan repayments 1,223,895 317,793 12,307 16,468 1,570,463
Other income 22 1,541 1,563
Net transfers from other funds 298,123 707,591 560,079 618,925 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total additions 59,349,689 21,292,446 2,072,436 3,346,792 4,976,103 91,037,466
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 2,589,913 548,748 11,045 20,438 3,170,144
Participant loans 1,608,450 411,475 51,275 44,300 2,115,500
Participant loan repayments 1,570,463 1,570,463
Other expenses 1,365 1,365
Transfers to Supplemental Retirement Savings Plan 12,339 1,955 1,496 15,790
Net transfers to other plans 175,810 367 176,177
Net transfers to other funds 1,771,313 187,491 6,437 219,477 2,184,718
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 6,146,851 1,160,420 70,712 285,711 1,570,463 9,234,157
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits:
Plan equity, end of year $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No.
33-44473) of our report dated February 18, 1994, for the Rochester
Telephone Corporation Craft Savings Plan - II. Such report constitutes
part of this Form 11-K, which appears as Exhibit 28-3 of the Annual
Report of Rochester Telephone Corporation on Form 10-K for the year
ended December 31, 1993.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PROGRAM FOR
ROCHESTER TELEPHONE CORPORATION SUBSIDIARY COMPANIES
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits
at December 31, 1993 and 1992
Statements of Changes in Net assets Available for
Plan Benefits for the years ended December 31, 1993 and 1992
Notes to Financial Statements
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
RETIREMENT SAVINGS PROGRAM FOR
ROCHESTER TELEPHONE CORPORATION
SUBSIDIARY COMPANIES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PROGRAM FOR ROCHESTER TELEPHONE
CORPORATION SUBSIDIARY COMPANIES
INDEX TO FINANCIAL STATEMENTS
- - - ------------------------------------------------------------------------------
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits at December 31, 1993 and
1992
Statements of Changes in Net Assets Available for Plan Benefits for the years
ended December 31, 1993 and 1992
Notes to Financial Statements
* * * * *
(ALL OTHER SCHEDULES ARE NOT REQUIRED OR NOT APPLICABLE.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Retirement Savings
Program for Rochester Telephone Corporation
Subsidiary Companies
In our opinion, the accompanying statements of net assets available for
plan benefits and the related statements of changes in net assets
available for plan benefits present fairly, in all material respects, the
financial position of the Retirement Savings Program for Rochester
Telephone Corporation Subsidiary Companies at December 31, 1993 and 1992,
and the changes in its financial position for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PROGRAM FOR ROCHESTER TELEPHONE CORPORATION
SUBSIDIARY COMPANIES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
---------------------------------------------- -------------------------------------------
Fund A Fund B Fund C Fund D Total Fund A Fund B Fund C Fund D Total
------- ------- -------- ------- --------- ------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions receivable $ 14,799 $ 9,582 $ 6,351 $ 7,617 $ 38,349 $ 13,391 $ 4,910 $ 1,748 $ 3,411 $ 23,460
Investment in the Rochester Telephone
Corporation Master Trust Fund, at
market value 575,344 321,060 173,726 180,771 1,250,901 377,694 159,538 92,788 59,717 689,737
-------- -------- -------- -------- ---------- -------- -------- ------- ------- --------
Net assets available for Plan benefits $590,143 $330,642 $180,077 $188,388 $1,289,250 $391,085 $164,448 $94,536 $63,128 $713,197
======== ======== ======== ======== ========== ======== ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PROGRAM FOR ROCHESTER TELEPHONE CORPORATION
SUBSIDIARY COMPANIES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
------------------------------------------------ ----------------------------------------------
Fund A Fund B Fund C Fund D Total Fund A Fund B Fund C Fund D Total
-------- -------- -------- ------- -------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed
to:
Employee contributions $180,435 $100,290 $ 58,951 $ 73,698 $413,374 $147,557 $ 42,106 $23,373 $36,173 $249,209
Earnings from participation in
Master Trust 32,290 55,106 11,964 13,071 112,431 22,790 23,216 7,309 2,532 55,847
Rollover contributions from other
plans 13,371 8,906 23,576 27,594 73,447 7,624 69,054 50,890 127,568
Transfers from other funds 4,359 22,414 6,534 19,110 52,417 9,513 1,544 11,057
-------- ------- -------- -------- -------- -------- -------- ------- ------- --------
Total additions 230,455 186,716 101,025 133,473 651,669 177,971 143,889 83,116 38,705 443,681
-------- ------- -------- -------- -------- -------- -------- ------- ------- --------
Deductions from net assets
attributed to:
Withdrawals 9,614 5,382 2,270 82 17,348 1,041 1,041
Transfers to other plans in
Master Trust 571 1,209 1,537 2,534 5,851 4,159
Transfers to other funds 21,212 13,931 11,677 5,597 52,417 1,345 5,553 11,057
-------- ------- -------- -------- ------- -------- -------- ------- ------- -------
Total deductions 31,397 20,522 15,484 8,213 75,616 5,200 1,345 5,553 12,098
-------- ------- -------- -------- ------- -------- -------- ------- ------- -------
Increase in net assets 199,058 166,194 85,541 125,260 576,053 172,771 143,889 81,771 33,152 431,583
Net assets available for
plan benefits:
Plan equity, beginning of year 391,085 164,448 94,536 63,128 713,197 218,314 20,559 12,765 29,976 281,614
-------- -------- -------- -------- --------- -------- -------- ------- ------- -------
Plan equity, end of year $590,143 $330,642 $180,077 $188,388 $1,289,250 $391,085 $164,448 $94,536 $63,128 $713,197
======== ======== ======== ======== ========== ======== ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PROGRAM FOR
ROCHESTER TELEPHONE CORPORATION
SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
The Retirement Savings Program for Rochester Telephone Corporation Subsidiary
Companies (the "Plan") is a defined contribution plan established by the Board
of Directors of Rochester Telephone Corporation (the "Company") effective
December 19, 1990. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan provides participants
the option of having their basic and supplemental contributions to the Plan made
on a salary reduction basis and thus the tax attributes are on a deferred tax
basis. The principal provisions of the Plan are described below.
Participation
All employees of a participating company of Rochester Telephone Corporation who
are not eligible to participate in another 401(k) plan are eligible to
participate, except employees subject to a collective bargaining agreement
providing retirement benefits under another plan.
Administration
The Plan is administered by the Subsidiaries' Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plan is Marine Midland Bank, N.A.
Funding policy
The Plan consists of four separate funds. Fund A consists of various group
annuity contracts. Fund B is a stock investment fund consisting of Rochester
Telephone Corporation's common stock. Fund C is the American National Bank
Equity Index Fund, which holds stocks listed on the Standard and Poors 500
Index. Fund D is the Merrill Lynch Capital Fund, a diversified securities fund.
The Plan provides that each participant may voluntarily make contributions
through a salary reduction agreement for whatever whole percentage a participant
chooses, minimum of 2% up to a maximum of 16%, subject to maximum contribution
provisions imposed by the Internal Revenue Code under Section 401(k). The
participant's voluntary non-deductible contributions for a plan year shall not
when added to the participant's tax-deferred contributions exceed 16% of the
participant's compensation. Rochester Telephone Corporation does not contribute
to this Plan except to the extent of transmitting contributions to the trustee.
Individual accounts which record the participants' contributions, the earnings
on all contributions and the amount of the participant's interest in each fund
are maintained for each participant.
<PAGE>
-2-
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Employees' Retirement Savings Plan. The trustee of this new
plan will be the Putnam Fiduciary Trust Company.
Master Trust
Effective January 1, 1992, the Plan investments were transferred into the
Rochester Telephone Corporation Master Trust Fund (Master Trust). The Master
Trust includes five other defined contribution plans of Rochester Telephone
Corporation. The Plan's interest in the net assets of the Master Trust is the
total of the specific interests of the individual participants in the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in all material respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plan when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plan are paid by the Company.
Valuation of investment assets
Plan assets are valued at fair market value as of the year-end date.
Adjustments for unrealized appreciation or depreciation of such values are
included in the operating results of the Plan.
Master Trust allocation basis
Investments and investment earnings of the Master Trust are allocated to each of
the plans participating in the Master Trust based on the plan's proportional
ownership interest as adjusted for contributions and withdrawals made by each
plan.
NOTE 3 - FEDERAL INCOME TAX STATUS:
A determination letter from the Internal Revenue Service has not yet been
received; however, the Company believes that the Plan is a qualified plan exempt
from federal income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
-3-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER
TRUST FUND:
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1993 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-----------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 448,073 $ 56,786 $ 41,908 $ 2,375 $ 549,142
Employee contributions receivable 85,337 57,768 17,162 18,424 178,691
Rochester Telephone
Corporation contributions receivable 36,098 13,877 5,058 5,000 60,033
Investments:
Hartford Life Insurance Company Group Annuity
Contracts, at cost - fixed rates of 8.00%
With no specified maturity dates 24,554,791 24,554,791
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15%
to mature at June 1998 5,051,085 5,051,085
New York Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.60%
to mature at June 1998 6,246,893 6,246,893
Prudential Insurance Company of America Group Annuity
Contracts, at cost - fixed rates of 5.19% and 5.97%
to mature at June 1997 and June 1999 7,194,288 7,194,288
John Hancock Mutual Life Insurance Company Group
Annuity, at cost - fixed rate of 5.58% to mature
at June 1998 6,239,801 6,239,801
Metropolitan Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 5.16% to mature
at December 1997 6,381,425 6,381,425
Common stock of Rochester Telephone Corporation,
at market value:
1993 - 608,963 shares at a cost of $17,047,227 27,479,455 27,479,455
American National Bank Equity Index Fund, at market
value:
1993 - 27,974 shares at a cost of $3,373,962 3,934,575 3,934,575
Merrill Lynch Capital Fund, at market value:
1993 - 161,296 shares at a cost of $4,166,304 4,687,134 4,687,134
Participant loans 3,906,771 3,906,771
------------ ------------ ----------- ----------- ----------- ------------
56,237,791 27,607,886 3,998,703 4,712,933 3,906,771 96,464,084
------------ ------------ ----------- ----------- ----------- ------------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
------------ ------------ ----------- ----------- ----------- ------------
Net assets available for Plan benefits $ 55,518,851 $ 27,884,022 $ 3,862,637 $ 4,834,000 $ 3,906,771 $ 96,006,281
============ ============ =========== =========== =========== ============
</TABLE>
<PAGE>
-4-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1992 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-----------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 705,732 $ 80,962 $ 39,007 $ 20,564 $ 846,265
Investments:
Hartford Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 8.00% with no
specified maturity date 47,758,093 47,758,093
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15%
to mature at June 1998 4,739,013 4,739,013
Common stock of Rochester Telephone Corporation,
at market value:
1992 - 562,834 shares at a cost of $14,418,106 20,051,064 20,051,064
American National Bank Equity Index Fund,
at market value:
1992 - 15,346 shares at a cost of $1,711,346 1,962,717 1,962,717
Merrill Lynch Capital Fund, at market value:
1992 - 115,477 shares at a cost of $2,891,763 3,040,517 3,040,517
Participant loans $ 3,405,640 3,405,640
------------ ------------ ----------- ---------- ----------- ------------
Net assets available for Plan benefits $ 53,202,838 $ 20,132,026 $ 2,001,724 $ 3,061,081 $ 3,405,640 $ 81,803,309
============ ============ =========== =========== =========== ============
</TABLE>
<PAGE>
-5-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 4,146,445 $ 1,800,874 $ 574,198 $ 528,877 $ 7,050,394
Rochester Telephone Corporation contributions 1,205,590 538,458 235,848 212,530 2,192,426
Rollover contributions from other plans 44,033 28,569 44,647 42,575 159,824
Interest and dividend income 3,638,211 933,958 1,134 187,225 $ 252,842 5,013,370
Net appreciation in fair value of participation
units 4,718,412 309,275 198,401 5,226,088
Realized (loss) gain (120,036) 348 123,992 4,304
Participant loans 1,916,270 1,916,270
Participant loan repayments 1,292,233 316,179 29,668 29,901 1,667,981
Transfers from other plans in Master Trust 24,438 26,692 10,051 10,285 2,187 73,653
Transfers from other funds 456,072 1,361,626 1,182,052 870,176 3,869,926
------------ ------------ ----------- ----------- ----------- ------------
Total additions 10,807,022 9,604,732 2,387,221 2,203,962 2,171,299 27,174,236
------------ ------------ ----------- ----------- ----------- ------------
Deductions from net assets attributed to:
Withdrawals 3,865,224 1,018,840 210,829 348,541 5,443,434
Participant loans 1,331,845 423,800 90,650 69,975 1,916,270
Participant loan repayments 1,667,981 1,667,981
Transfers to other plans in Master Trust 62,793 4,602 1,537 2,534 2,187 73,653
Transfers to other funds 3,231,147 405,494 223,292 9,993 3,869,926
------------ ------------ ----------- ----------- ----------- ------------
Total deduction 8,491,009 1,852,736 526,308 431,043 1,670,168 12,971,264
------------ ------------ ----------- ----------- ----------- ------------
Increase in net assets 2,316,013 7,751,996 1,860,913 1,772,919 501,131 14,202,972
Net assets available for plan benefits:
Plan equity, beginning of year 53,202,838 20,132,026 2,001,724 3,061,081 3,405,640 81,803,309
------------ ------------ ----------- ----------- ----------- ------------
Plan equity, end of year $ 55,518,851 $ 27,884,022 $ 3,862,637 $ 4,834,000 $ 3,906,771 $ 96,006,281
============ ============ =========== =========== =========== ============
</TABLE>
<PAGE>
-6-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-----------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 3,986,094 $ 1,271,074 $ 289,619 $ 338,115 $ 5,884,902
Rochester Telephone Corporation contributions 1,795,958 479,003 164,132 206,331 2,645,424
Rollover contribution from individual plans into
Master Trust 47,875,301 15,543,115 789,747 1,947,856 66,156,019
Rollover contributions from other plans 197,468 202,915 121,189 83,227 604,799
Interest and dividend income 3,972,828 807,862 846 166,758 4,948,294
Net appreciation (depreciation) in fair value of
participation units 1,918,019 134,517 (69,277) 1,983,259
Realized gain 43,533 38,389 81,922
Participant loans $ 4,976,103 4,976,103
Participant loan repayments 1,223,895 317,793 12,307 16,468 1,570,463
Other income 22 1,541 1,563
Net transfers from other funds 298,123 707,591 560,079 618,925 2,184,718
------------ ------------ ----------- ----------- ----------- ------------
Total additions 59,349,689 21,292,446 2,072,436 3,346,792 4,976,103 91,037,466
------------ ------------ ----------- ----------- ----------- ------------
Deductions from net assets attributed to:
Withdrawals 2,589,913 548,748 11,045 20,438 3,170,144
Participant loans 1,608,450 411,475 51,275 44,300 2,115,500
Participant loan repayments 1,570,463 1,570,463
Other expenses 1,365 1,365
Transfers to Supplemental Retirement Savings Plan 12,339 1,955 1,496 15,790
Net transfers to other plans 175,810 367 176,177
Net transfers to other funds 1,771,313 187,491 6,437 219,477 2,184,718
------------ ------------ ----------- ----------- ----------- ------------
Total deductions 6,146,851 1,160,420 70,712 285,711 1,570,463 9,234,157
------------ ------------ ----------- ----------- ----------- ------------
Net assets available for Plan benefits:
Plan equity, end of year $ 53,202,838 $ 20,132,026 $ 2,001,724 $ 3,061,081 $ 3,405,640 $ 81,803,309
============ ============ =========== =========== =========== ============
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No. 33-
38310) of our report dated February 18, 1994, for the Rochester Telephone
Corporation Retirement Savings Program for Rochester Telephone Corporation
Subsidiary Companies. Such report constitutes part of this Form 11-K,
which appears as Exhibit 28-4 of the Annual Report of Rochester Telephone
Corporation on Form 10-K for the year ended December 31, 1993.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.5
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Consolidated Statements of Net Assets Available for Plan Benefits
for the Year Ended December 31, 1993 and 1992
Consolidated Statements of Changes in Net assets Available for
Plan Benefits for the Years Ended December 31, 1993 and 1992
Consolidated Notes to Financial Statements
Consolidated Statement of Investments Held at December 31, 1993
Consolidated 1993 Reportable Transactions
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN FOR
BARGAINING UNIT EMPLOYEES
CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
Consolidated Statements of Net Assets Available for Plan Benefits at December
31, 1993 and 1992
Consolidated Statements of Changes in Net Assets Available for Plan Benefits for
the years ended December 31, 1993 and 1992
Consolidated Notes to Financial Statements
Schedule A - Consolidated Statement of Investments held at December 31, 1993
Schedule B - Consolidated 1993 Reportable Transactions
* * * * *
(All other schedules are not required or not applicable.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Vista Telephone Company
Retirement Savings Plan and the
Vista Telephone Company Retirement Savings
Plan for Bargaining Unit Employees
In our opinion, the accompanying consolidated statements of net assets
available for plan benefits and the related consolidated statements of
changes in net assets available for plan benefits present fairly, in all
material respects, the financial position of the Vista Telephone Company
Retirement Savings Plan and the Vista Telephone Company Retirement Savings
Plan for Bargaining Unit Employees at December 31, 1993 and 1992, and the
changes in its financial position for the years then ended in conformity
with generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits of the financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information
included in Schedules A through B is presented for purposes of additional
analysis and is not a required part of the basic financial statements but
is additional information required by ERISA. Such information has been
subjected to the auditing procedures applied in the audit 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.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
CONSOLIDATED STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 633 $ 10,133 $ 7,664 $ 10,904 $ 29,334
Contributions receivable 80,124 88,338 22,667 12,498 203,627
Accrued loan repayments 11,621 13,246 2,697 1,210 28,774
Interest receivable 119 116 31 37 303
Investments:
Investment contracts, at cost 4,548,440 4,548,440
Common stock of Rochester Telephone
Corporation, at market value -
1993 - 91,758 shares at cost of
$3,005,799
1992 - 87,280 shares at cost
of $2,660,038 4,140,580 4,140,580
American National Bank Equity
Index Fund, at market value -
1993 - 4,516 shares at cost
of $513,500
1992 - 3,801 shares at cost
of $418,500 635,289 635,289
Investment in the Merrill Lynch
Capital Fund, at market value -
1993 - 39,026 shares at cost
of $1,019,743
1992 - 39,586 shares at cost
of $1,052,616 1,175,376 1,175,376
Participant loans $426,990 426,990
---------- ---------- ---------- -------- -------- -----------
4,233,077 4,660,273 1,208,435 659,938 426,990 11,188,713
---------- ---------- ---------- -------- -------- -----------
Accrued benefits 13,713 58,086 5,228 129 77,156
Accrued loans 6,221 2,821 1,900 1,558 12,500
Interfund payable (receivable) 103,810 (51,589) (19,703) (32,518)
Forfeitures 692 2,327 418 592 4,029
---------- ---------- ---------- -------- -------- -----------
Net assets available for
Plan benefits $4,108,641 $4,648,628 $1,220,592 $690,177 $426,990 $11,095,028
========== ========== ========== ======== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
-------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 7,981 $ 160,122 $ 6,426 $ 4,581 $179,110
Contributions receivable 68,528 110,857 28,917 11,184 219,486
Accrued loan repayments 8,767 11,509 3,214 972 24,462
Interest receivable 48 34 23 15 120
Investments:
Investment contracts, at cost 4,780,091 4,780,091
Common stock of Rochester Telephone
Corporation, at market value -
1993 - 91,758 shares at cost of
$3,005,799
1992 - 87,280 shares at cost
of $2,660,038 3,109,350 3,109,350
American National Bank Equity
Index Fund, at market value -
1993 - 4,516 shares at cost
of $513,500
1992 - 3,801 shares at cost
of $418,500 486,217 486,217
Investment in the Merrill Lynch
Capital Fund, at market value -
1993 - 39,026 shares at cost
of $1,019,743
1992 - 39,586 shares at cost
of $1,052,616 1,070,431 1,070,431
Participant loans $393,916 393,916
---------- ---------- ---------- -------- -------- ----------
3,194,674 5,062,613 1,109,011 502,969 393,916 10,263,183
---------- ---------- ---------- -------- -------- ----------
Accrued benefits 3,737 22,098 197 26,032
Accrued loans 1,264 4,358 381 197 6,200
Interfund payable (receivable) 5,018 5,175 (22,612) 12,419
Forfeitures
---------- ---------- ---------- -------- -------- ----------
Net assets available for
Plan benefits $3,184,655 $5,030,982 $1,131,045 $490,353 $393,916 $10,230,951
========== ========== ========== ======== ======== ==========
</TABLE>
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------------------------------------------
1993
-------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Participating employees $ 429,380 $ 542,979 $ 159,958 $ 78,762 $1,211,079
Vista Telephone Company
contributions 302,906 395,275 110,077 55,082 863,340
Rollovers from other plans 11,659 4,983 9,628 10,169 36,439
Interest income 2,119 362,318 780 615 365,832
Dividend income 141,939 43,921 185,860
Unrealized appreciation of
investments 894,759 114,481 54,023 1,063,263
Realized (loss) gain (1,947) (1,947)
Participant loans $197,475 197,475
Participant loan interest income 11,930 13,178 3,297 1,315 29,720
Participant loan repayments 62,861 71,734 19,836 9,970 164,401
Net transfers from other funds 194,765 51,679 246,444
---------- ---------- ---------- -------- -------- -----------
Total additions 2,050,371 1,390,467 461,978 261,615 197,475 4,361,906
Deductions from net assets
attributed to:
Withdrawals 1,054,725 1,443,956 320,089 49,485 2,868,255
Participant loans 65,606 100,411 20,617 10,841 197,475
Participant loan repayments 164,401 164,401
Forfeitures 6,054 10,112 3,623 1,465 21,254
Net transfers to other funds 218,342 28,102 246,444
---------- ---------- ---------- -------- -------- -----------
Total deductions 1,126,385 1,772,821 372,431 61,791 164,401 3,497,829
---------- ---------- ---------- -------- -------- -----------
Increase (decrease) in net assets 923,986 (382,354) 89,547 199,824 33,074 864,077
Net assets available for Plan benefits:
Plan equity, beginning of year 3,184,655 5,030,982 1,131,045 490,353 393,916 10,230,951
---------- ---------- ---------- -------- -------- -----------
Plan equity, end of year $4,108,641 $4,648,628 $1,220,592 $690,177 $426,990 $11,095,028
========== ========== ========== ======== ======== ===========
<CAPTION>
For the year ended December 31,
-------------------------------------------------------------------
1992
-------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Participating employees $ 374,369 $ 595,878 $ 164,141 $ 69,138 1,203,526
Vista Telephone Company
contributions 275,203 448,438 115,522 48,899 888,062
Rollovers from other plans 2,696 6,689 3,989 3,473 16,847
Interest income 1,018 322,295 511 367 324,191
Dividend income 116,497 27,811 13,821 158,129
Unrealized appreciation of
investments 315,492 22,600 19,866 357,958
Realized (loss) gain 376 2,482 2,858
Participant loans $ 249,038 249,038
Participant loan interest income 10,936 13,064 3,179 700 27,879
Participant loan repayments 31,424 49,394 12,616 3,130 96,564
Net transfers from other funds 150,308 150,308
---------- ---------- ---------- -------- --------- ----------
Total additions 1,128,011 1,586,066 350,369 161,876 249,038 3,475,360
Deductions from net assets
attributed to:
Withdrawals
Participant loans 95,202 157,556 9,626 6,172 268,556
Participant loan repayments 63,956 138,863 31,034 15,185 249,038
Forfeitures 96,565 96,565
Net transfers to other funds
21,683 56,957 71,668 150,308
---------- ---------- ---------- -------- ---------- --------
Total deductions 180,841 296,419 97,617 93,025 96,565 764,467
---------- ---------- ---------- -------- ---------- --------
Increase (decrease) in net assets
Net assets available for Plan benefits: 947,170 1,289,647 252,752 68,851 152,473 2,710,893
Plan equity, beginning of year 2,237,485 3,741,335 878,293 421,502 241,443 7,520,058
---------- ---------- ---------- -------- ---------- ---------
Plan equity, end of year $3,184,655 $5,030,982 $1,131,045 $490,353 $ 393,916 $10,230,951
========== ========== ========== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
Effective June 20, 1991, the Board of Directors of Rochester Telephone
Corporation (the "Company") established two retirement savings plans for Vista
Corporation. These were the Vista Telephone Company Retirement Savings Plan,
which was established for non-bargaining employees of the two companies, and
the Vista Telephone Company Retirement Savings Plan for Bargaining Unit
Employees, which was established for the bargaining unit employees of the two
companies. Each plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The two plans currently have identical
provisions. As permitted by ERISA the plans are being administered as one plan.
These financial statements consolidate the two plans (the "Plans").
Participation
All employees of Vista Telephone Company of Iowa and the Vista Telephone Company
of Minnesota who are in the Communications Workers of America (CWA) Locals 7171
and 7270 and who have been employed for at least six months are eligible to
participate in the Vista Telephone Company Retirement Savings Plan for
Bargaining Unit Employees. All other employees who have been employed for at
least six months are eligible to participate in the Vista Telephone Company
Retirement Savings Plan.
Administration
The Plans are administered by the Vista Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plans is FirsTier Bank, N.A.
Funding policy
The Plans consist of four separate funds. Fund A is a stock investment fund
consisting of Rochester Telephone Corporation's common stock. Fund B consists
of various group annuity contracts. Fund C is the Merrill Lynch Capital Fund, a
diversified securities fund. Fund D is the American National Bank Equity Fund,
which holds stocks listed on the Standard and Poors 500 Index.
The Plans provide that participants may voluntarily make a basic contribution
which cannot exceed six per cent of their basic pay. Any participant who
contributes the maximum basic contribution may make a supplemental contribution
which, when added to the basic contribution,
<PAGE>
-2-
cannot exceed sixteen per cent of the participant's basic pay. In addition, the
Company contributes an amount equal to 70 per cent of each participant's basic
contribution. All participant contributions are subject to the limitations set
forth in Section 401 of the current tax code.
Individual participant loans
Participant loans cannot exceed the lesser of 50% of the vested amounts in the
participant's account under the Plans or $50,000. A participant may have two
loans outstanding and the loans are treated as directed investments by the
borrower with respect to his account. Interest paid on the loan is credited to
the borrower's account and the participant does not share in the income of the
Plans' assets with respect to the amounts borrowed and not yet repaid. General
loans have a term of no more than five years except that a loan may be granted
for a period not to exceed ten years if the proceeds are used to purchase the
participant's principal residence.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Employees Retirement Savings Plan. The trustee of this new
plan will be the Putnam Fiduciary Trust Company.
Forfeitures
Amounts relating to Vista's contributions made to non-vested participants who
were subsequently terminated in 1993 are paid back to the companies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in all material
respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plans when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plans when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plans are paid by the Company.
Valuation of investment assets
The Plans' assets are valued at fair market value as of the year-end date.
<PAGE>
-3-
NOTE 3 - FEDERAL INCOME TAX STATUS:
The Company is in receipt of a determination letter from the Internal Revenue
Service which states that the Plan is a qualified plan exempt from Federal
income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULES
CONSOLIDATED STATEMENT OF INVESTMENTS HELD SCHEDULE A
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Current
Outstanding Value
Interest Maturity December 31, December 31,
Identity of Issuer Description of Investment Rate Date Cost 1993 1993
- - - ------------------ ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fixed Income Fund:
John Hancock (1) Guaranteed Investment Contract 5.93% December 1998 N/A N/A $ 756,376
Metropolitan Life (1) Guaranteed Investment Contract 7.10% December 1994 N/A N/A 1,009,248
to
December 1997
Continental Assurance (1) Guaranteed Investment Contract 8.88% August 1995 N/A N/A 1,094,966
The Principal Financial
Group (1) Guaranteed Investment Contract 7.70% December 1997 N/A N/A 1,687,850
Common Stock Fund:
Rochester Telephone
Corporation Common Stock N/A N/A $ 3,005,799 91,758 4,140,580
Pooled Funds:
American National Bank Index Fund N/A N/A $ 513,500 4,516 635,289
Merrill Lynch Capital Fund N/A N/A $ 1,019,743 39,026 1,175,376
-----------
$10,499,685
===========
Individual Participant Loans:
Plan Trustee Individual Participant Loans Prime less 1/4% Various N/A N/A $ 426,990
===========
</TABLE>
(1) Represents contract value at December 31, 1993.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULES
1993 CONSOLIDATED REPORTABLE TRANSACTIONS
SUMMARY OF TRANSACTIONS IN EXCESS OF 5% OF ASSETS SCHEDULE B
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Net
Purchases/ Purchase Sale Gain
Description Sales Cost Price Price (Loss)
----------- ----- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C>
BOY - Value of net assets
$10,230,951 x 5% =
$511,548
Purchases:
Rochester Telephone Corporation
Common stock 8 $ 784,979 $ 784,979
Dreyfus Treasury Prime Cash
Management Fund 133 $ 3,101,420 $ 3,101,420
John Hancock Life
GIC 7 $ 1,227,928 $ 1,227,928
Sales:
Rochester Telephone Corporation
Common stock 3 $ 186,146 $ 275,837 $ 89,691
Dreyfus Treasury Prime Cash
Management Fund 120 $ 3,092,318 $ 3,092,318
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No. 33-41307)
of our report dated February 18, 1994, for the Rochester Telephone Corporation
Vista Telephone Company Retirement Savings Plan and the Vista Telephone Company
Retirement Savings Plan for Bargaining Unit Employees. Such report constitutes
part of this Form 11-K, which appears as Exhibit 28-5 of the Annual Report of
Rochester Telephone Corporation on Form 10-K for the year ended December 31,
1993
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Consolidated Statements of Net Assets Available for Plan Benefits
for the Year Ended December 31, 1993 and 1992
Consolidated Statements of Changes in Net assets Available for
Plan Benefits for the Years Ended December 31, 1993 and 1992
Consolidated Notes to Financial Statements
Consolidated Statement of Investments Held at December 31, 1993
Consolidated 1993 Reportable Transactions
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY
RETIREMENT SAVINGS PLAN FOR
BARGAINING UNIT EMPLOYEES
CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
DECEMBER 31, 1993 AND 1992
Consolidated Statements of Net Assets Available for Plan Benefits at December
31, 1993 and 1992
Consolidated Statements of Changes in Net Assets Available for Plan Benefits for
the years ended December 31, 1993 and 1992
Consolidated Notes to Financial Statements
Schedule A - Consolidated Statement of Investments held at December 31, 1993
Schedule B - Consolidated 1993 Reportable Transactions
* * * * *
(All other schedules are not required or not applicable.)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Vista Telephone Company
Retirement Savings Plan and the
Vista Telephone Company Retirement Savings
Plan for Bargaining Unit Employees
In our opinion, the accompanying consolidated statements of net assets
available for plan benefits and the related consolidated statements of
changes in net assets available for plan benefits present fairly, in all
material respects, the financial position of the Vista Telephone Company
Retirement Savings Plan and the Vista Telephone Company Retirement Savings
Plan for Bargaining Unit Employees at December 31, 1993 and 1992, and the
changes in its financial position for the years then ended in conformity
with generally accepted accounting principles. These financial statements
are the responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits of the financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information
included in Schedules A through B is presented for purposes of additional
analysis and is not a required part of the basic financial statements but
is additional information required by ERISA. Such information has been
subjected to the auditing procedures applied in the audit 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.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
CONSOLIDATED STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
------ ------ ------ ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 633 $ 10,133 $ 7,664 $ 10,904 $ 29,334
Contributions receivable 80,124 88,338 22,667 12,498 203,627
Accrued loan repayments 11,621 13,246 2,697 1,210 28,774
Interest receivable 119 116 31 37 303
Investments:
Investment contracts, at cost 4,548,440 4,548,440
Common stock of Rochester Telephone
Corporation, at market value -
1993 - 91,758 shares at cost of
$3,005,799
1992 - 87,280 shares at cost
of $2,660,038 4,140,580 4,140,580
American National Bank Equity
Index Fund, at market value -
1993 - 4,516 shares at cost
of $513,500
1992 - 3,801 shares at cost
of $418,500 635,289 635,289
Investment in the Merrill Lynch
Capital Fund, at market value -
1993 - 39,026 shares at cost
of $1,019,743
1992 - 39,586 shares at cost
of $1,052,616 1,175,376 1,175,376
Participant loans $ 426,990 426,990
---------- ---------- ---------- ---------- ---------- -----------
4,233,077 4,660,273 1,208,435 659,938 426,990 11,188,713
---------- ---------- ---------- ---------- ---------- -----------
Accrued benefits 13,713 58,086 5,228 129 77,156
Accrued loans 6,221 2,821 1,900 1,558 12,500
Interfund payable (receivable) 103,810 (51,589) (19,703) (32,518)
Forfeitures 692 2,327 418 592 4,029
---------- ---------- ---------- ---------- ---------- -----------
Net assets available for
Plan benefits $4,108,641 $4,648,628 $1,220,592 $ 690,177 $ 426,990 $11,095,028
========== ========== ========== ========== ========== ===========
<CAPTION>
December 31, 1992
--------------------------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
------ ------ ------ ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 7,981 $ 160,122 $ 6,426 $ 4,581 $ 179,110
Contributions receivable 68,528 110,857 28,917 11,184 219,486
Accrued loan repayments 8,767 11,509 3,214 972 24,462
Interest receivable 48 34 23 15 120
Investments:
Investment contracts, at cost 4,780,091 4,780,091
Common stock of Rochester Telephone
Corporation, at market value -
1993 - 91,758 shares at cost of
$3,005,799
1992 - 87,280 shares at cost
of $2,660,038 3,109,350 3,109,350
American National Bank Equity
Index Fund, at market value -
1993 - 4,516 shares at cost
of $513,500
1992 - 3,801 shares at cost
of $418,500 486,217 486,217
Investment in the Merrill Lynch
Capital Fund, at market value -
1993 - 39,026 shares at cost
of $1,019,743
1992 - 39,586 shares at cost
of $1,052,616 1,070,431 1,070,431
Participant loans $ 393,916 393,916
---------- ---------- ---------- ---------- ---------- -----------
3,194,674 5,062,613 1,109,011 502,969 393,916 10,263,183
---------- ---------- ---------- ---------- ---------- -----------
Accrued benefits 3,737 22,098 197 26,032
Accrued loans 1,264 4,358 381 197 6,200
Interfund payable (receivable) 5,018 5,175 (22,612) 12,419
Forfeitures
---------- ---------- ---------- ---------- ---------- -----------
Net assets available for
Plan benefits $3,184,655 $5,030,982 $1,131,045 $ 490,353 $ 393,916 $10,230,951
========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31,
----------------------------------------------------------------------------------------
1993
----------------------------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Participating employees $ 429,380 $ 542,979 $ 159,958 $ 78,762 $1,211,079
Vista Telephone Company
contributions 302,906 395,275 110,077 55,082 863,340
Rollovers from other
plans 11,659 4,983 9,628 10,169 36,439
Interest income 2,119 362,318 780 615 365,832
Dividend income 141,939 43,921 185,860
Unrealized appreciation
of investments 894,759 114,481 54,023 1,063,263
Realized (loss) gain (1,947) (1,947)
Participant loans $ 197,475 197,475
Participant loan
interest income 11,930 13,178 3,297 1,315 29,720
Participant loan
repayments 62,861 71,734 19,836 9,970 164,401
Net transfers from
other funds 194,765 51,679 246,444
---------- ---------- ---------- -------- -------- -----------
Total additions 2,050,371 1,390,467 461,978 261,615 197,475 4,361,906
Deductions from net assets
attributed to:
Withdrawals 1,054,725 1,443,956 320,089 49,485 2,868,255
Participant loans 65,606 100,411 20,617 10,841 197,475
Participant loan
repayments 164,401 164,401
Forfeitures 6,054 10,112 3,623 1,465 21,254
Net transfers to
other funds 218,342 28,102 246,444
---------- ---------- ---------- -------- -------- -----------
Total deductions 1,126,385 1,772,821 372,431 61,791 164,401 3,497,829
---------- ---------- ---------- -------- -------- -----------
Increase (decrease) in net
assets 923,986 (382,354) 89,547 199,824 33,074 864,077
Net assets available for
Plan benefits:
Plan equity, beginning
of year 3,184,655 5,030,982 1,131,045 490,353 393,916 10,230,951
---------- ---------- ---------- -------- -------- -----------
Plan equity, end
of year $4,108,641 $4,648,628 $1,220,592 $690,177 $426,990 $11,095,028
========== ========== ========== ======== ======== ===========
<CAPTION>
For the year ended December 31,
----------------------------------------------------------------------------------------
1992
----------------------------------------------------------------------------------------
Loan
Fund A Fund B Fund C Fund D Fund Total
---------- ---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Participating employees $ 374,369 $ 595,878 $ 164,141 $ 69,138 $1,203,526
Vista Telephone Company
contributions 275,203 448,438 115,522 48,899 888,062
Rollovers from other
plans 2,696 6,689 3,989 3,473 16,847
Interest income 1,018 322,295 511 367 324,191
Dividend income 116,497 27,811 13,821 158,129
Unrealized appreciation
of investments 315,492 22,600 19,866 357,958
Realized (loss) gain 376 2,482 2,858
Participant loans $ 249,038 249,038
Participant loan
interest income 10,936 13,064 3,179 700 27,879
Participant loan
repayments 31,424 49,394 12,616 3,130 96,564
Net transfers from
other funds 150,308 150,308
---------- ---------- ---------- -------- -------- -----------
Total additions 1,128,011 1,586,066 350,369 161,876 249,038 3,475,360
Deductions from net assets
attributed to:
Withdrawals 95,202 157,556 9,626 6,172 268,556
Participant loans 63,956 138,863 31,034 15,185 249,038
Participant loan
repayments 96,565 96,565
Forfeitures
Net transfers to
other funds 21,683 56,957 71,668 150,308
---------- ---------- ---------- -------- -------- -----------
Total deductions 180,841 296,419 97,617 93,025 96,565 764,467
---------- ---------- ---------- -------- -------- -----------
Increase (decrease) in net
assets 947,170 1,289,647 252,752 68,851 152,473 2,710,893
Net assets available for
Plan benefits:
Plan equity, beginning
of year 2,237,485 3,741,335 878,293 421,502 241,443 7,520,058
---------- ---------- ---------- -------- -------- -----------
Plan equity, end
of year $ 3,184,655 $5,030,982 $1,131,045 $490,353 $393,916 $10,230,951
========== ========== ========== ======== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
Effective June 20, 1991, the Board of Directors of Rochester Telephone
Corporation (the "Company") established two retirement savings plans for Vista
Telephone Company of Iowa and Vista Telephone Company of Minnesota in
conjunction with the acquisition of various telephone properties from Centel
Corporation. These were the Vista Telephone Company Retirement Savings Plan,
which was established for non-bargaining employees of the two companies, and the
Vista Telephone Company Retirement Savings Plan for Bargaining Unit Employees,
which was established for the bargaining unit employees of the two companies.
Each plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The two plans currently have identical
provisions. As permitted by ERISA the plans are being administered as one plan.
These financial statements consolidate the two plans (the "Plans").
Participation
All employees of Vista Telephone Company of Iowa and the Vista Telephone Company
of Minnesota who are in the Communications Workers of America (CWA) Locals 7171
and 7270 and who have been employed for at least six months are eligible to
participate in the Vista Telephone Company Retirement Savings Plan for
Bargaining Unit Employees. All other employees who have been employed for at
least six months are eligible to participate in the Vista Telephone Company
Retirement Savings Plan.
Administration
The Plans are administered by the Vista Employees' Benefit Committee whose
members are appointed by the Company's Board of Directors. The trustee of the
Plans is FirsTier Bank, N.A.
Funding policy
The Plans consist of four separate funds. Fund A is a stock investment fund
consisting of Rochester Telephone Corporation's common stock. Fund B consists
of various group annuity contracts. Fund C is the Merrill Lynch Capital Fund, a
diversified securities fund. Fund D is the American National Bank Equity Fund,
which holds stocks listed on the Standard and Poors 500 Index.
The Plans provide that participants may voluntarily make a basic contribution
which cannot exceed six per cent of their basic pay. Any participant who
contributes the maximum basic contribution may make a supplemental contribution
which, when added to the basic contribution,
<PAGE>
-2-
cannot exceed sixteen per cent of the participant's basic pay. In addition, the
Company contributes an amount equal to 70 per cent of each participant's basic
contribution. All participant contributions are subject to the limitations set
forth in Section 401 of the current tax code.
Individual participant loans
Participant loans cannot exceed the lesser of 50% of the vested amounts in the
participant's account under the Plans or $50,000. A participant may have two
loans outstanding and the loans are treated as directed investments by the
borrower with respect to his account. Interest paid on the loan is credited to
the borrower's account and the participant does not share in the income of the
Plans' assets with respect to the amounts borrowed and not yet repaid. General
loans have a term of no more than five years except that a loan may be granted
for a period not to exceed ten years if the proceeds are used to purchase the
participant's principal residence.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Employees Retirement Savings Plan. The trustee of this new
plan will be the Putnam Fiduciary Trust Company.
Forfeitures
Amounts relating to Vista's contributions made to non-vested participants who
were subsequently terminated in 1993 are paid back to the companies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in all material
respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plans when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plans when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plans are paid by the Company.
Valuation of investment assets
The Plans' assets are valued at fair market value as of the year-end date.
<PAGE>
-3-
NOTE 3 - FEDERAL INCOME TAX STATUS:
The Company is in receipt of a determination letter from the Internal Revenue
Service which states that the Plan is a qualified plan exempt from Federal
income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULES
CONSOLIDATED STATEMENT OF INVESTMENTS HELD SCHEDULE A
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Current
Outstanding Value
Description of Interest Maturity December 31, December 31,
Identity of Issuer Investment Rate Date Cost 1993 1993
------------------ -------------- -------- -------- ---- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Income Fund:
John Hancock (1) Guaranteed Investment Contract 5.93% December 1998 N/A N/A $ 756,376
Metropolitan Life (1) Guaranteed Investment Contract 7.10% December 1994 to N/A N/A 1,009,248
December 1997
Continental Assurance (1) Guaranteed Investment Contract 8.88% August 1995 N/A N/A 1,094,966
The Principal Financial
Group (1) Guaranteed Investment Contract 7.70% December 1997 N/A N/A 1,687,850
Common Stock Fund:
Rochester Telephone
Corporation Common Stock N/A N/A $ 3,005,799 91,758 4,140,580
Pooled Funds:
American National Bank Index Fund N/A N/A $ 513,500 4,516 635,289
Merrill Lynch Capital Fund N/A N/A $ 1,019,743 39,026 1,175,376
-----------
$10,499,685
===========
Individual Participant Loans:
Plan Trustee Individual Participant Loans Prime less 1/4% Various N/A N/A $ 426,990
===========
</TABLE>
(1) Represents contract value at December 31, 1993.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN AND
THE VISTA TELEPHONE COMPANY RETIREMENT SAVINGS PLAN
FOR BARGAINING UNIT EMPLOYEES
FINANCIAL STATEMENTS AND SCHEDULES
1993 CONSOLIDATED REPORTABLE TRANSACTIONS
SUMMARY OF TRANSACTIONS IN EXCESS OF 5% OF ASSETS SCHEDULE B
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Net
Purchases/ Purchase Sale Gain
Description Sales Cost Price Price (Loss)
----------- ---------- ----- -------- ----- ------
<S> <C> <C> <C> <C> <C>
BOY - Value of net assets
$10,230,951 x 5% =
$511,548
Purchases:
Rochester Telephone Corporation
Common stock 8 $ 784,979 $ 784,979
Dreyfus Treasury Prime Cash
Management Fund 133 $3,101,420 $3,101,420
John Hancock Life
GIC 7 $1,227,928 $1,227,928
Sales:
Rochester Telephone Corporation
Common stock 3 $ 186,146 $ 275,837 $ 89,691
Dreyfus Treasury Prime Cash
Management Fund 120 $3,092,318 $3,092,318
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No. 33-
41306) of our report dated February 18, 1994, for the Rochester Telephone
Corporation Vista Telephone Company Retirement Savings Plan and the Vista
Telephone Company Retirement Savings Plan for Bargaining Unit Employees.
Such report constitutes part of this Form 11-K, which appears as Exhibit
28-6 of the Annual Report of Rochester Telephone Corporation on Form 10-K
for the year ended December 31, 1993
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
Exhibit 28.7
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-4166
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PLAN FOR AFFILIATED COMPANIES
(Full name of plan)
ROCHESTER TELEPHONE CORPORATION
(Name of issuer of securities
held pursuant to the plan)
180 South Clinton Avenue
Rochester, New York 14646-0700
(Address of principal executive offices)
REQUIRED INFORMATION
In accordance with the applicable provisions of Article 6A of Regulation S-X,
the following financial statements are filed as part of this Report.
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits
for the Year Ended December 31, 1993 and 1992
Statements of Changes in Net assets Available for
Plan Benefits for the Years Ended December 31, 1993 and 1992
Notes to Financial Statements
The following exhibit is filed as part of this Report.
Consent of Independent Accountants
<PAGE>
ROCHESTER TELEPHONE
CORPORATION
RETIREMENT SAVINGS PLAN FOR
AFFILIATED COMPANIES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PLAN FOR AFFILIATED COMPANIES
INDEX TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
Report of Independent Accountants
Statements of Net Assets Available for Plan Benefits at December 31,
1993 and 1992
Statements of Changes in Net Assets Available for Plan Benefits for the years
ended December 31, 1993 and 1992
Notes to Financial Statements
* * * * *
(All other schedules are not required or not applicable)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 18, 1994
To the Board of Directors of
Rochester Telephone Corporation and
Participants in the Retirement Savings Plan
for Affiliated Companies
In our opinion, the accompanying statements of net assets available for
plan benefits, and the related statements of changes in net assets
available for plan benefits present fairly, in all material respects, the
financial position of the Rochester Telephone Corporation Retirement
Savings Plan for Affiliated Companies at December 31, 1993 and 1992, and
the changes in its financial position for the years then ended in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to expressed an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed
above.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PLAN FOR AFFILIATED COMPANIES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
--------------------------------------------- ----------------------------------------------
Fund A Fund B Fund C Fund D Total Fund A Fund B Fund C Fund D Total
------ ------ ------ ------ ----- ------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions receivable $ 169,112 169,112
Investment in the Rochester
Telephone Corporation
Master Trust Fund, at
market value $2,160,931 $331,261 $198,873 $166,505 $2,857,570 2,071,327 2,071,327
---------- -------- -------- -------- ---------- ---------- ------ ------ ------ ----------
Net assets available for
Plan benefits $2,160,931 $331,261 $198,873 $166,505 $2,857,570 $2,240,439 $2,240,439
========== ======== ======== ======== ========== ========== ====== ====== ====== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PLAN FOR AFFILIATED COMPANIES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1993 December 31, 1992
----------------------------------------------- --------------------------------------------
Fund A Fund B Fund C Fund D Total Fund A Fund B Fund C Fund D Total
------ ------ ------ ------ ----- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Employee contributions $ 248,397 $ 80,229 $ 63,029 $ 40,499 $ 432,154 $ 113,850 $113,850
Rochester Telephone
Corporation contributions 85,139 25,470 21,792 15,194 147,595 406,358 406,358
Earnings from participation
in Master Trust 131,371 39,020 12,278 14,834 197,503 153,114 153,114
Rollover contributions from
other plans 2,698 5,568 1,298 1,299 10,863
Transfers from other funds 182,671 113,526 99,688 395,885
--------- -------- -------- --------- ---------- ---------- ------ ------ ------ ---------
Total additions 467,605 332,958 211,923 171,514 1,184,000 673,322 673,322
--------- -------- -------- --------- ---------- ---------- ------ ------ ------ ---------
Deductions from net assets
attributed to:
Withdrawals 133,492 1,697 595 613 136,397 242,768 242,768
Transfers to other plans
in Master Trust 34,587 34,587 150,587 150,587
Transfers to other funds 379,034 12,455 4,396 395,885
--------- -------- -------- --------- ---------- ---------- ------ ------ ------ ---------
Total deductions 547,113 1,697 13,050 5,009 566,869 393,355 393,355
--------- -------- -------- --------- ---------- ---------- ------ ------ ------ ---------
(Decrease) increase in
net assets (79,508) 331,261 198,873 166,505 617,131 279,967 279,967
Net assets available for
plan benefits:
Plan equity, beginning
of year 2,240,439 2,240,439 1,960,472 1,960,472
---------- -------- -------- --------- ---------- ---------- ------ ------ ------ ----------
Plan equity, end of year $2,160,931 $331,261 $198,873 $166,505 $2,857,570 $2,240,439 $2,240,439
========== ======== ======== ========= ========== ========== ====== ====== ====== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
ROCHESTER TELEPHONE CORPORATION
RETIREMENT SAVINGS PLAN FOR AFFILIATED COMPANIES
NOTES TO FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF THE PLAN:
The Rochester Telephone Corporation Retirement Savings Plan for Affiliated
Companies is a defined contribution Plan adopted to provide retirement benefits
for employees of Rochester Telephone Corporation ("RTC") affiliated companies.
This Plan was formed as a result of the transfer of the net assets of certain
other plans sponsored by Rochester Telephone Corporation.
Participation
All non-management employees of any RTC affiliated company which has adopted
this Plan who are not covered by a collective bargaining agreement and have been
employed for one year with at least 1,000 hours of service are eligible to
participate.
Administration
The Plan is administered by the RTC Employee Benefit Committee, as appointed by
the RTC Board of Directors. The trustee of the Plan's assets is Marine Midland
Bank, N.A.
Funding policy
The Plan provides that each participant may voluntarily make contributions from
their regular salary on a pre-tax basis. A minimum contribution of 1% of
compensation is required and contributions may not exceed the limits set forth
in the Internal Revenue Code Section 401(k) and Section 415. Employee
contributions are 100% vested at all times.
Employer contributions may be made from current or accumulated profits at the
discretion of the individual Board of Directors of each RTC affiliate company
participating in the Plan. Employer contributions are allocated to
participants' individual accounts based on years of service and salary.
Participants' rights to employer contributions after December 31, 1988, are 100%
vested after five years of service, or at age 65 or upon termination due to
death or disability. There is no partial vesting to employer contributions
after December 31, 1988. Contributions in 1988 and prior were partially vested
based upon years of service.
Termination
Effective March 1, 1994, this Plan will terminate and its assets will merge with
other Rochester Telephone Corporation defined contribution plans to form the
Rochester Tel Group Employees' Retirement Savings Plan. The trustee of this new
plan will be the Putnam Fiduciary Trust Company.
<PAGE>
-2-
Forfeitures
Approximately $85,000 relating to employer contributions to non-vested
participants who were subsequently terminated in 1993 are included in the net
assets of Fund A. These forfeitures will be allocated to vested participants in
1994 based on years of service and compensation levels.
Master Trust
Effective January 1, 1992, certain Plan investments were transferred into the
Rochester Telephone Corporation Master Trust Fund (Master Trust). The Master
Trust includes five other defined contribution plans of Rochester Telephone
Corporation. The Plan's interest in the net assets of the Master Trust is the
total of the specific interests of the individual participants in the Plan. See
Note 4 for the Master Trust Statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared in accordance with
current generally accepted accounting principles in all material respects.
Recognition of contributions and withdrawals
Contributions are recorded by the Plan when withheld from employees and accrued
by the Company. Withdrawals are recorded by the Plan when a request for
disbursement is received from the employee.
Administrative expenses
Expenses associated with the Plan are paid by the RTC affiliated companies
participating in the Plan.
Valuation of investment assets
Investment assets are stated at fair market value as of the year-end date.
Transfers
Net transfers represent transfers from the RTC affiliated companies to other
plans participating in the Master Trust.
NOTE 3 - FEDERAL INCOME TAX STATUS:
A determination letter from the Internal Revenue Service has not yet been
received; however, the Company believes that the Plan is a qualified plan exempt
from federal income taxes under Section 401 of the Internal Revenue Code.
<PAGE>
-3-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1993 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 448,073 $ 56,786 $ 41,908 $ 2,375 $ 549,142
Employee contributions receivable 85,337 57,768 17,162 18,424 178,691
Rochester Telephone Corporation 36,098 13,877 5,058 5,000 60,033
contributions receivable
Investments:
Hartford Life Insurance Company Group
Annuity Contracts, at cost - fixed
rates of 8.00% with no specified
maturity dates 24,554,791 24,554,791
Principal Mutual Life Insurance
Company Group Annuity Contract, at
cost - fixed rate of 7.15% to
mature at June 1998 5,051,085 5,051,085
New York Life Insurance Company Group
Annuity Contract, at cost - fixed
rate of 5.60% to mature at June 1998 6,246,893 6,246,893
Prudential Insurance Company of
America Group Annuity Contracts, at
cost - fixed rates of 5.19% and 5.97% to
mature at June 1997 and June 1999 7,194,288 7,194,288
John Hancock Mutual Life Insurance
Company Group Annuity, at cost - fixed
rate of 5.58% to mature at June 1998 6,239,801 6,239,801
Metropolitan Life Insurance Company
Group Annuity Contract, at cost - fixed
rate of 5.16% to mature at December 1997 6,381,425 6,381,425
Common stock of Rochester Telephone
Corporation, at market value:
1993 - 608,963 shares at a cost of
$17,047,227 27,479,455 27,479,455
American National Bank Equity Index
Fund, at market value:
1993 - 27,974 shares at a cost of
$3,373,962 3,934,575 3,934,575
Merrill Lynch Capital Fund, at market
value:
1993 - 161,296 shares at a cost of
$4,166,304 4,687,134 4,687,134
Participant loans $ 3,906,771 3,906,771
----------- ----------- ----------- ----------- ---------- -----------
56,237,791 27,607,886 3,998,703 4,712,933 3,906,771 96,464,084
----------- ----------- ----------- ----------- ---------- -----------
Accrued benefits 276,741 82,854 50,647 47,561 457,803
Interfund payable (receivable) 442,199 (358,990) 85,419 (168,628)
----------- ----------- ----------- ----------- ---------- -----------
Net assets available for Plan benefits $55,518,851 $27,884,022 $ 3,862,637 $ 4,834,000 $3,906,771 $96,006,281
=========== =========== =========== =========== ========== ===========
</TABLE>
<PAGE>
-4-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
The statement of net assets available for Plan benefits and of changes in net
assets available for Plan benefits as of and for the year ended December 31,
1992 is as follows:
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
-----------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
------ ------ ------ ------ --------- -----
<S> <C> <C> <C> <C> <C> <C>
Cash and short-term investments $ 705,732 $ 80,962 $ 39,007 $ 20,564 $ 846,265
Investments:
Hartford Life Insurance Company Group Annuity
Contract, at cost - fixed rate of 8.00% with no
specified maturity date 47,758,093 47,758,093
Principal Mutual Life Insurance Company Group
Annuity Contract, at cost - fixed rate of 7.15% to
mature at June 1998 4,739,013 4,739,013
Common stock of Rochester Telephone Corporation,
at market value:
1992 - 562,834 shares at a cost of $14,418,106 20,051,064 20,051,064
American National Bank Equity Index Fund,
at market value:
1992 - 15,346 shares at a cost of $1,711,346 1,962,717 1,962,717
Merrill Lynch Capital Fund, at market value:
1992 - 115,477 shares at a cost of $2,891,763 3,040,517 3,040,517
Participant loans $3,405,640 3,405,640
----------- ----------- ---------- ---------- ---------- -----------
Net assets available for Plan benefits $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-5-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1993
-----------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
---------- ----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 4,146,445 $ 1,800,874 $ 574,198 $ 528,877 $ 7,050,394
Rochester Telephone Corporation contributions 1,205,590 538,458 235,848 212,530 2,192,426
Rollover contributions from other plans 44,033 28,569 44,647 42,575 159,824
Interest and dividend income 3,638,211 933,958 1,134 187,225 $ 252,842 5,013,370
Net appreciation in fair value of participation units 4,718,412 309,275 198,401 5,226,088
Realized (loss) gain (120,036) 348 123,992 4,304
Participant loans 1,916,270 1,916,270
Participant loan repayments 1,292,233 316,179 29,668 29,901 1,667,981
Transfers from other plans in Master Trust 24,438 26,692 10,051 10,285 2,187 73,653
Transfers from other funds 456,072 1,361,626 1,182,052 870,176 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total additions 10,807,022 9,604,732 2,387,221 2,203,962 2,171,299 27,174,236
----------- ----------- ---------- ---------- ---------- -----------
Deductions from net assets attributed to:
Withdrawals 3,865,224 1,018,840 210,829 348,541 5,443,434
Participant loans 1,331,845 423,800 90,650 69,975 1,916,270
Participant loan repayments 1,667,981 1,667,981
Transfers to other plans in Master Trust 62,793 4,602 1,537 2,534 2,187 73,653
Transfers to other funds 3,231,147 405,494 223,292 9,993 3,869,926
----------- ----------- ---------- ---------- ---------- -----------
Total deductions 8,491,009 1,852,736 526,308 431,043 1,670,168 12,971,264
----------- ----------- ---------- ---------- ---------- -----------
Increase in net assets 2,316,013 7,751,996 1,860,913 1,772,919 501,131 14,202,972
Net assets available for plan benefits:
Plan equity, beginning of year 53,202,838 20,132,026 2,001,724 3,061,081 3,405,640 81,803,309
----------- ----------- ---------- ---------- ---------- -----------
Plan equity, end of year $55,518,851 $27,884,022 $3,862,637 $4,834,000 $3,906,771 $96,006,281
=========== =========== ========== ========== ========== ===========
</TABLE>
<PAGE>
-6-
NOTE 4 - INVESTMENTS IN ROCHESTER TELEPHONE CORPORATION MASTER TRUST FUND:
(Continued)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
For the year ended December 31, 1992
--------------------------------------------------------------------------
Fund A Fund B Fund C Fund D Loan Fund Total
----------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Employee contributions $ 3,986,094 $ 1,271,074 $ 289,619 $ 338,115 $ 5,884,902
Rochester Telephone Corporation contributions 1,795,958 479,003 164,132 206,331 2,645,424
Rollover contribution from individual plans into
Master Trust 47,875,301 15,543,115 789,747 1,947,856 66,156,019
Rollover contributions from other plans 197,468 202,915 121,189 83,227 604,799
Interest and dividend income 3,972,828 807,862 846 166,758 4,948,294
Net appreciation (depreciation) in fair value of
participation units 1,918,019 134,517 (69,277) 1,983,259
Realized gain 43,533 38,389 81,922
Participant loans $4,976,103 4,976,103
Participant loan repayments 1,223,895 317,793 12,307 16,468 1,570,463
Other income 22 1,541 1,563
Net transfers from other funds 298,123 707,591 560,079 618,925 2,184,718
----------- ----------- ---------- ---------- ----------- -----------
Total additions 59,349,689 21,292,446 2,072,436 3,346,792 4,976,103 91,037,466
----------- ----------- ---------- ---------- ----------- -----------
Deductions from net assets attributed to:
Withdrawals 2,589,913 548,748 11,045 20,438 3,170,144
Participant loans 1,608,450 411,475 51,275 44,300 2,115,500
Participant loan repayments 1,570,463 1,570,463
Other expenses 1,365 1,365
Transfers to Supplemental Retirement Savings Plan 12,339 1,955 1,496 15,790
Net transfers to other plans 175,810 367 176,177
Net transfers to other funds 1,771,313 187,491 6,437 219,477 2,184,718
----------- ----------- ---------- ---------- ----------- -----------
Total deductions 6,146,851 1,160,420 70,712 285,711 1,570,463 9,234,157
----------- ----------- ---------- ---------- ----------- -----------
Net assets available for Plan benefits:
Plan equity, end of year $53,202,838 $20,132,026 $2,001,724 $3,061,081 $3,405,640 $81,803,309
=========== =========== ========== ========== =========== ===========
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (File No.
33-52358) of our report dated February 18, 1994, for the Rochester
Telephone Corporation Retirement Savings Plan for Affiliated Companies.
Such report constitutes part of this Form 11-K, which appears as Exhibit
28-7 of the Annual Report of Rochester Telephone Corporation on Form 10-
K for the year ended December 31, 1993.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Rochester, New York
March 22, 1994
<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ROCHESTER TELEPHONE CORPORATION
(Name of Registrant as Specified In Its Charter)
ROCHESTER TELEPHONE CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- - - --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF ROCHESTER TELEPHONE CORPORATION]
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 27, 1994
Dear Shareowners:
The Annual Meeting of Shareowners of Rochester Telephone Corporation (the
"Company") will be held at the Hyatt Regency Rochester, 125 East Main Street,
Rochester, New York 14604, at 10:00 a.m. on April 27, 1994, for the following
purposes:
(1) To elect twelve Directors;
(2) To consider and act upon a proposal to elect Price Waterhouse as the
Company's independent auditors for the fiscal year ending December 31, 1994;
(3) To consider and act upon four proposals regarding employee and
director compensation plans; and
(4) To transact such other business, if any, as may properly come before
the meeting or any adjournments thereof.
The Board of Directors, on January 17, 1994, amended Article II, Section 2,
of the By-Laws to reduce the number of Directors constituting the entire Board
from fourteen to twelve, effective with the first meeting of Directors
following the Annual Meeting of Shareowners on April 27, 1994.
The Board of Directors has fixed the close of business on March 8, 1994, as
the record date for the determination of shareowners entitled to notice of and
to vote at the meeting.
YOUR VOTE IS VERY IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
DECIDE TO ATTEND THE MEETING.
IF YOU ARE PLANNING TO ATTEND THE ANNUAL MEETING, PLEASE CHECK THE BOX ON THE
BACK OF THE PROXY CARD.
By Action of the Board of Directors,
/s/ Josephine S. Trubek
Josephine S. Trubek
Corporate Secretary
Rochester, New York
March 25, 1994
<PAGE>
PROXY STATEMENT TABLE OF CONTENTS
<TABLE>
<S> <C>
Proposal 1--Election of Directors.......................................... 2
Information about the Board of Directors................................... 2
Nominees for Director...................................................... 4
Security Ownership of Management........................................... 6
Management Security Ownership Table........................................ 7
Report of Committee on Management (Compensation Committee Report).......... 8
Performance Graph.......................................................... 11
Compensation of Company Management......................................... 12
Summary Compensation Table................................................. 12
Option/SAR Grants in Last Fiscal Year...................................... 13
Individual Grants Table.................................................... 13
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values Table................................... 14
Long-Term Incentive Plans--Awards in Last Fiscal Year Table................ 14
Pension Plan Table......................................................... 15
Compensation Committee Interlocks and Insider Participation in Committee 16
Decisions.................................................................
Certain Relationships and Related Transactions............................. 17
Indemnification of Certain Persons......................................... 17
Proposal 2--Election of Independent Auditors............................... 17
Proposals To Modify Employee and Director Compensation Plans............... 18
Proposal 3--Amendment to the Supplemental Retirement Savings Plan.......... 18
Proposal 4--Restated Executive Stock Option Plan........................... 19
Proposal 5--Amendment to the Directors' Stock Option Plan.................. 21
Proposal 6--Directors' Common Stock Deferred Growth Plan................... 22
New Plan Benefits Table.................................................... 24
Other Matters and Future Proposals of Shareowners.......................... 24
</TABLE>
<PAGE>
[LOGO OF ROCHESTER TELEPHONE CORPORATION]
PROXY STATEMENT
1994 ANNUAL MEETING OF SHAREOWNERS OF ROCHESTER TELEPHONE CORPORATION
This Proxy Statement and the enclosed proxy card are being furnished to
shareowners on or about March 25, 1994. The purpose of this solicitation of
proxies by the Board of Directors of Rochester Telephone Corporation, Executive
Offices, 180 South Clinton Avenue, Rochester, New York 14646, is the Annual
Meeting of Shareowners to be held on April 27, 1994.
The close of business on March 8, 1994, has been fixed as the record date for
the determination of the shareowners entitled to notice of, and to vote at, the
Annual Meeting. On that date there were 36,579,066 shares of the Company's
$1.00 par value common stock outstanding and entitled to vote at the meeting.
Each shareowner is entitled to cast one vote for each share of common stock
held as of the Record Date.
Each proxy which is properly executed and returned in the enclosed return
envelope will be voted at the Annual Meeting. Shares represented by proxies
will be voted in accordance with the shareowner's directions as specified on
the proxy card. If any proxy does not specify a choice, the shares will be
voted for the election of the Directors nominated in the proxy; in favor of the
election of Price Waterhouse as independent auditors; and in favor of each of
the four proposals regarding employee and Director compensation plans. A
shareowner granting a proxy has the right to revoke it by a duly executed proxy
bearing a later date, by attending the meeting and voting in person, or by
otherwise notifying the Company prior to the meeting.
The proxy card contains spaces for the shareowner to indicate if he or she
wishes to abstain on one or more of the proposals or to withhold authority to
vote for one or more nominees for Director. Directors are elected by a
plurality of the votes cast. Votes withheld in connection with the election of
one or more of the nominees for Director will not be counted as votes cast in
connection with that nominee's election. The election of auditors requires the
affirmative vote of a majority of the votes cast. In accordance with New York
law, abstentions are not counted in determining the votes cast in connection
with the selection of auditors. Approval of the proposals with respect to
employee and Director compensation plans (Proposals 3-6) requires the
affirmative vote of a majority of the outstanding shares entitled to vote on
those proposals; abstentions on any of the Plan proposals have the same effect
as a vote against that proposal.
Under the rules of the New York Stock Exchange, brokerage firms holding
shares for the benefit of their clients may vote in their discretion on behalf
of their clients with respect to "discretionary items" if the clients have not
furnished voting instructions within ten days of the shareowner meeting. The
election of Directors and auditors are discretionary items with respect to
which brokerage firms may vote. The proposals relating to the employee and
Director compensation plans are also discretionary items and brokers who
receive no instructions from their clients have the discretion to vote on these
proposals. Any broker "non-votes" will not be considered as votes cast with
respect to the employee and Director compensation plan proposals but will have
the same effect as a no vote since the proposals require approval by a majority
of the outstanding shares entitled to vote.
1
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
INFORMATION ABOUT THE BOARD OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors of the Company is currently composed of fourteen
Directors, but after April 27, 1994, the Board will be composed of twelve
members as a result of a recent change in the Company's By-Laws. The Board of
Directors nominates the twelve persons named on pages 4 through 6 for election
to the Board of Directors. All of the nominees are currently Directors of the
Company whose terms expire coincident with the Annual Meeting. If elected, all
nominees will serve until the Annual Meeting of Shareowners to be held in 1995
or until such time as their respective successors are elected.
The Board of Directors held six meetings during 1993. All of the Directors,
with the exception of Dr. Thomas, attended at least 75% of the total meetings
of the Board and its committees which they were eligible to attend.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and through the activities of its committees. The standing committees of the
Board are the Audit Committee, the Committee on Management, the Committee on
Directors and the Executive Committee.
The Audit Committee of the Board is composed at present of Douglas H.
McCorkindale, Chair; John R. Block, Brenda E. Edgerton, and G. Dennis O'Brien.
This committee reviews the scope of audit activities, reviews the financial
reports of the Company, and reviews with management significant and material
matters which may result in either potential liability to the Company or
significant exposure to the Company. The Committee also makes reports and
recommendations with respect to audit activities, findings, and reports of the
independent public accountants and the internal audit staff of the Company. The
Audit Committee held two meetings in 1993.
The present members of the Committee on Management are Daniel E. Gill, Chair;
Harlan D. Calkins and Richard P. Miller, Jr. This committee is responsible for
determining the compensation, benefits and perquisites of all executive
officers of the Company, with the exception of the Chief Executive Officer, and
for recommending the compensation, benefits and perquisites of the Chief
Executive Officer to the full Board. This committee also develops and
administers executive compensation plans and reviews succession planning for
the Company and other significant human resources issues. The Committee on
Management held three meetings in 1993.
The present members of the Executive Committee are Jairo A. Estrada, Chair;
Patricia C. Barron, Ronald L. Bittner, Daniel E. Gill, Alan C. Hasselwander,
and Douglas H. McCorkindale. The Executive Committee possesses all of the
powers of the Board of Directors except those which, by law or the Company's
By-Laws, cannot be delegated to it. The Executive Committee met four times in
1993.
The Committee on Directors was newly created in 1993. It focuses the Board's
attention on corporate governance issues and has also assumed responsibility,
previously held by the Executive Committee, to act as a nominating committee.
The Committee on Directors assists the Company in addressing a rapidly changing
industry through its efforts to attract and retain the most qualified Board
members. It is presently composed of Patricia C. Barron, Chair; Wolcott J.
Humphrey, Jr., Dr. Leo J. Thomas, and Michael T. Tomaino. This committee is
responsible for all matters relating to the selection, qualification,
evaluation, and compensation of members of the Board of Directors and all
nominees to the Board and serves as the nominating committee. The Committee on
Directors held two meetings in 1993.
2
<PAGE>
The Committee on Directors will consider nominations by shareowners. Such
shareowner submissions should include sufficient biographical information so
that the committee can appropriately assess a nominee's qualifications. This
information would include, at a minimum, the nominee's name and address,
business and other experience, and a listing of any other Boards on which the
nominee may be a member. All submissions should be sent by a letter addressed
in care of the Corporate Secretary, to the Committee on Directors, Board of
Directors, Rochester Telephone Corporation, 180 South Clinton Avenue,
Rochester, New York 14646-0700. Alternatively, any such letter may be addressed
to any individual member of the Committee on Directors, in care of the Company,
at the same address. Suggestions in connection with an Annual Meeting of
Shareowners should be received by September 1 of the prior year in order to
receive consideration.
COMPENSATION OF DIRECTORS
The Company compensates its Directors through the payment of an annual
retainer and meeting fees. The annual retainer is $18,000. Each Director also
receives a $1,300 fee for each Board and/or committee meeting attended. Each
committee chair receives an annual chairperson's retainer in the amount of
$3,000. Directors who are employees of the Company or its subsidiaries receive
no Director fees. Directors may elect to defer payment of their fees to future
years.
Pursuant to the Company's Directors' Stock Option Plan, Directors annually
receive an option to purchase 1,000 shares of the Company's common stock. These
options expire ten years after issuance, and the exercise price is the value of
the stock on the day the option was issued. Each outside Director, except Alan
C. Hasselwander, received an option for 1,000 shares at an exercise price of
$39.50 per share on April 21, 1993.
Outside Directors who join the Board on a date other than the date when the
annual grant of options is made receive an option for a prorated number of
shares of the Company's common stock. Brenda E. Edgerton joined the Board on
February 1, 1993, and on that date she received an option for 225 shares at an
exercise price of $36.875 per share. Additionally, Mr. Hasselwander completed
his pre-pension leave from the Company on May 11, 1993, and as of that date was
considered an outside Board member for purposes of option grants under the
Directors' Stock Option Plan. On May 11, 1993, Mr. Hasselwander received an
option for 949 shares at an exercise price of $37.25 per share.
The Company also provides its Directors with cellular telephone equipment and
service and other nominal in-kind benefits.
Mr. Michael T. Tomaino, a Director of the Company, is the sole shareowner of
Michael T. Tomaino, P.C., a partner in the law firm of Nixon, Hargrave, Devans
& Doyle. The Company has retained this law firm prior to and during the last
two years and intends to retain the firm in the current year.
The Board believes that all of the nominees will be available and willing to
serve as Directors. If any nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such substitute as the
Board may recommend or the Board may fill the vacancy at a later date after
selecting an appropriate nominee.
The following sets forth information concerning the principal occupations and
business experience of the nominees.
3
<PAGE>
THE FOLLOWING PERSONS HAVE BEEN NOMINATED FOR ELECTION AT THE ANNUAL MEETING
OF SHAREOWNERS TO BE HELD ON APRIL 27, 1994:
PATRICIA C. BARRON, 51, is President, Xerox Engineering Systems, Xerox
Corporation, a manufacturer of office systems and equipment. Prior to her
present position, she held other executive positions at Xerox Corporation
including the position of President, Office Documents Products Division. She is
a Director of Quaker Chemical Corporation. She has been a Director of the
Company since 1990.
RONALD L. BITTNER, 52, is Chairman, President and Chief Executive Officer of
the Company. Prior to his present position, Mr. Bittner was Executive Vice
President and President--Telecommunications Group of the Company. He has held a
number of other executive positions at Rochester Tel, and has been a Director
of the Company since 1989.
JOHN R. BLOCK, 59, is President of the National American Wholesale Grocers'
Association, a trade association which serves as a forum for the exchange of
ideas and information and is a source of data for the industry. He is a
Director of Deere and Co., Arcadian Corporation, Crop Genetics, Inc., and
Purina Mills, Inc. He has been a Director of the Company since 1990.
HARLAN D. CALKINS, 62, is Chairman, President, Chief Executive Officer, and a
Director of Rochester Midland Corporation, a manufacturer of specialty
chemicals. He has been a Director of the Company since 1982.
BRENDA E. EDGERTON, 44, is Vice President and Treasurer of Campbell Soup
Company, a manufacturer of prepared convenience foods. Prior to her present
position she served as Deputy Treasurer of Campbell Soup Company. She has been
a Director of the Company since 1993.
4
<PAGE>
JAIRO A. ESTRADA, 46, is Chairman of the Board and Chief Executive Officer of
Garden Way Incorporated, a company which manufactures outdoor power equipment.
He is a Director of Garden Way Incorporated and of The Chase Manhattan
Corporation. He has been a Director of the Company since 1989.
DANIEL E. GILL, 57, is Chairman and Chief Executive Officer of Bausch & Lomb
Incorporated, a worldwide manufacturer and marketer of health care and optical
products. Prior to his current position, Mr. Gill was President and Chief
Executive Officer of Bausch & Lomb. He is a Director of Bausch & Lomb, Reebok
International, Ltd., and Welch Allyn, Inc. He has been a Director of the
Company since 1981.
ALAN C. HASSELWANDER, 60, is Past Chairman of the Board of Rochester Tel.
Formerly, he was President and Chief Executive Officer of the Company. He has
been a Director of the Company since 1984.
DOUGLAS H. McCORKINDALE, 54, is Vice Chairman and Chief Financial and
Administrative Officer of Gannett Co., Inc., a nationwide diversified
communications company. Prior to his present position, he held other executive
positions at Gannett Co., Inc. He is a Director of Gannett Co., Inc.,
Continental Airlines, and seven mutual funds in the Prudential Mutual Fund
complex of funds. He has been a Director of the Company since 1980.
RICHARD P. MILLER, JR., 51, is Vice President for External Affairs and Senior
Counsel to the President of the University of Rochester. Prior to his present
position he was Chief Executive Officer of The Case-Hoyt Corporation. He is a
Director of Genesee Corporation and a Director of Forbes Products Corporation.
He has been a Director of the Company since 1984.
5
<PAGE>
DR. LEO J. THOMAS, 57, is Group Vice President and President, Imaging, of
Eastman Kodak Company, a manufacturer of photographic and chemical products.
Prior to his present position, he was Group Vice President and General Manager,
Health Group of Eastman Kodak Company, Chairman of Sterling Drug, Inc., a
subsidiary of Eastman Kodak. He is a Director of Eastman Kodak Company and of
John Wiley & Sons, Inc. He has been a Director of the Company since 1984.
MICHAEL T. TOMAINO, 56, is an Attorney with the law firm of Nixon, Hargrave,
Devans & Doyle, and has been a Director of the Company since 1975.
The following companies (which are mentioned above) do not have registered
securities nor are the companies otherwise required to file reports with the
Securities and Exchange Commission: Continental Airlines, Forbes Products
Corporation, and Welch Allyn.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE ABOVE NOMINEES
FOR DIRECTOR, DESIGNATED AS PROPOSAL 1 ON YOUR PROXY CARD. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE DIRECTION THEREON
TO THE CONTRARY.
SECURITY OWNERSHIP OF MANAGEMENT
In 1993, the Committee on Directors established guidelines for the minimum
amounts of the Company's common stock which Directors are encouraged to own.
These guidelines take into account a Director's tenure on the Board in
determining the level of share ownership. By the end of 1995, each outside
Director with at least five years' service on the Board should own at least
2,000 shares of the Company's common stock. Executive officers of the Company
are also encouraged to own shares of the Company. Their recommended stock
ownership levels are based on their position in the organization and are a
multiple of salary. Mr. Bittner's stock ownership target, to be achieved over
no more than a five year period, is the beneficial ownership of Company common
stock equal in value to four times his salary. The stock ownership target for
each of the Company's Corporate Vice Presidents is beneficial ownership of
Company common stock equal in value to two times his or her respective salary.
All Corporate Vice Presidents are also encouraged to achieve their targets
within no more than a five year period.
The following table sets forth the number of shares of the Company's common
stock beneficially owned by each Director and nominee, by each of the named
executive officers, and by Directors and officers of the Company as a group as
of March 8, 1994. No Director or officer owns more than 1% of the Company's
outstanding shares of common stock.
6
<PAGE>
MANAGEMENT SECURITY OWNERSHIP TABLE
<TABLE>
<CAPTION>
BENEFICIALLY OWNED SHARES
BENEFICIAL SUBJECT TO OUTSTANDING
NAME OWNERSHIP(1) STOCK OPTIONS(2) TOTAL
- - - ---- ------------ ------------------------- ------
<S> <C> <C> <C>
DIRECTORS AND NOMINEES:
Patricia C. Barron................ 200 666 866
Ronald L. Bittner................. 18,013 10,332 28,345
John R. Block..................... 220 666 886
Harlan D. Calkins................. 560 666 1,226
Brenda E. Edgerton................ 453 408 861
Jairo A. Estrada.................. 1,015 666 1,681
Daniel E. Gill.................... 569 666 1,235
Alan C. Hasselwander(3)........... 18,233 316 18,549
Wolcott J. Humphrey, Jr.(4)....... 857 333 1,190
Douglas H. McCorkindale........... 200 666 866
Richard P. Miller, Jr............. 533 333 866
G. Dennis O'Brien(4).............. 5,113 666 5,779
Dr. Leo J. Thomas................. 9,331 666 9,997
Michael T. Tomaino................ 634 666 1,300
NAMED EXECUTIVE OFFICERS:
Ronald L. Bittner................. 18,013 10,332 28,345
Dale M. Gregory................... 6,575 3,100 9,675
Louis L. Massaro.................. 4,163 2,400 6,563
Frederick R. Pestorius............ 3,049 2,400 5,449
John K. Purcell................... 3,108 3,000 6,108
</TABLE>
- - - --------
As of March 8, 1994, all Directors, nominees and officers as a group, an
aggregate of twenty-one persons, beneficially owned 83,716 shares of the
Company's common stock and, as a group, had within the following sixty days
the right to acquire an additional 33,948 shares which were subject to
outstanding stock options. The group's total aggregate holdings of 117,664
benefically owned shares constitutes less than 1% of the issued and
outstanding common stock of the Company as of that date.
(1) Includes all shares which each Director or officer directly, through any
contract, arrangement, understanding, relationship or otherwise, has or
shares the power to vote or to direct the voting of such shares or to
dispose or to direct the disposition of such shares. However, these
amounts include no shares which each Director or officer has the right to
acquire within the following sixty days pursuant to options or other
rights. Amounts in this column determine whether a Director or executive
officer has met his or her stock ownership targets.
(2) All shares which such persons have the right to acquire within the
following 60 days pursuant to options or other rights. These amounts do
not include shares which such persons have the right to acquire more than
sixty days in the future.
(3) Mr. Hasselwander disclaims beneficial ownership of 700 shares which are
owned by his spouse.
(4) Mr. Humphrey and Mr. O'Brien are each retiring from the Board effective
with the 1994 Annual Meeting.
The Company's Directors and executive officers are required to file reports
with the Securities and Exchange Commission and the New York Stock Exchange,
with copies to the Company, concerning ownership of and transactions in the
Company's common stock. Based solely on those reports furnished to the Company
and related information, the Company believes that all such filing
requirements for 1993 were complied with in a timely fashion.
7
<PAGE>
REPORT OF COMMITTEE ON MANAGEMENT
The philosophy of the Company's compensation program is to offer performance-
based compensation to its employees, while rewarding employees whose efforts
enable the Company to achieve its vision. The executive compensation program is
designed to measure and enhance executive performance.
The Company's executive compensation program has four components:
. Base Salary
. Annual Bonus
. Long-Term Incentive Plan
. Stock Option Plan
These components are designed to provide incentives and motivate key
executives whose efforts and job performance will enhance the strategic well-
being of the Company and maximize value to its shareowners.
The executive compensation program rewards performance consistent with the
Company's consolidated performance and the contribution of the individual
executive officers, including Mr. Bittner, toward that performance. It is also
competitive with compensation programs offered by employers of comparable size
in this industry.
The Company retains William M. Mercer, Inc., to review its executive
compensation program on an annual basis. The Company uses information from this
consulting firm, as well as public information concerning salaries paid in
comparably sized companies in the telecommunications industry, to determine
what a comparable telecommunications firm would consider an appropriate
performance-based compensation package for its executives.
The analysis includes information from a self-constructed group of thirty-one
publicly-traded companies in the telephone, long distance and cellular
industries. This group includes all companies reported in the Standard and
Poor's Telephone Index, together with twenty-three additional companies. On a
comparative basis, for both base salary and total compensation, the Company's
CEO would be considered within the second quartile while its other executives
are generally at the average. The Company's policy is to benchmark compensation
levels at the median of comparative companies and to reward results based on
performance.
BASE SALARY. The salaries of the executive officers, including Mr. Bittner,
were determined based on the executive's performance and an analysis of base
salaries paid executive officers having similar responsibilities in other
companies of similar size, both within and outside the telecommunications
industry. This analysis included many of the companies in the self-constructed
group of thirty-one publicly-traded companies, together with additional
companies from other industries with similar revenues and/or asset values. The
level of Mr. Bittner's base salary was also based upon a subjective assessment
of his individual performance and responsibilities as well as overall corporate
performance as measured by actual earnings per share and cash flow versus pre-
established targets; strategic goals and objectives for customer and employee
satisfaction; and growth of the business. The other executive officers have
similar measurements, but specific factors are more closely linked to
individual responsibilities. No relative weights are attributed to any specific
measurement factors.
ANNUAL BONUS. The Company's annual bonus plan, the Short Term Incentive Plan
(STI), is designed to provide performance-based compensation awards to
executives for achievement during the past year. The bonus awards are a
function of individual performance and corporate or business unit results
during the year. Business unit performance is a component of only a business
unit officer's bonus while overall corporate performance is a component of each
officer's bonus. The specified qualitative and quantitative criteria employed
by the Committee in determining bonus awards vary both individually and from
year to year. These
8
<PAGE>
criteria, or targets, are established as a means of measuring executive
performance. The corporate target for 1993 was a combined aggressive earnings
per share and cash flow target established by this Committee of the Board of
Directors as an incentive to increase the Company's cash flow and thus improve
long-term stock performance. This target was exceeded. All the Company's senior
executives participate in STI with payout awards varying by salary grade. With
respect to Mr. Bittner's participation, his STI annual bonus was based solely
upon achievement of the corporate target and a mechanical application of the
STI Plan. Specifically, this mechanical application of the STI Plan was
calculated by multiplying the corporate performance payout achieved, which for
Mr. Bittner was 100%, times the higher of actual salary or mid-point of the
salary range.
LONG-TERM INCENTIVE PLAN. The Company's long-term incentive plan, the
Performance Unit Plan (PUP), is designed to motivate executives to improve
shareowner value. The Plan focuses on the Company's stock performance over
three-year cycles. Executives receive Plan payouts based equally on the
Company's stock performance appreciation over the past three years as compared
to a group of sixteen telecommunications firms and corporate performance
against targets of various elements selected by this Committee at the beginning
of the cycle. These elements, cash return on gross assets and stock performance
measures, are intended to align executive compensation with the return received
by Rochester Tel's shareowners. Cycle payouts are a product of the Company's
stock price at the end of the cycle, corporate performance against the selected
targets, and the number of units granted to an executive for the cycle.
Mr. Bittner's award was based upon performance achieved at 145% of the target
levels. The awards made to the other executive officers were based upon
performance achieved at 138.2% to 145% of the target levels.
STOCK OPTION PLAN. Stock option plans are an important component of executive
compensation programs because they are a compensation vehicle which ties long-
term compensation directly to furthering the interests of shareowners and
improved corporate performance. The current stock option plan, as approved by
the New York State Public Service Commission, limits the number of stock
options which may be granted to the Company's executives. Nevertheless, the
Company's Executive Stock Option Plan is designed to align executive
compensation with the long-term performance of the Company's stock. Options
issued in 1993 do not expire until 2003, and the exercise price is the value of
the option on the day the option was issued. Prior to the beginning of each
year, option grant ranges are established by salary grade with the assistance
of the William M. Mercer, Inc. consulting firm. This Committee makes a
subjective determination of the specific stock option grant to be awarded to
each executive officer. The factors considered by the Committee in making this
determination are (a) the executive officer's past performance of previously
set objectives and (b) his or her expected future contribution to the long-term
strategic goals and objectives of the Company. No relative weights are
attributed to either of these factors. All executive officers of the Company
received options in 1993 based on their position in the Company, their
contribution to the achievement of the Company's long-term objectives as
assessed by Committee members based on their experience with the executive
officers, and upon the recommendation of the chief executive officer. Upon this
Committee's recommendation, the full Board awarded Mr. Bittner options based
upon these factors as well.
The Committee approved two changes to the executive compensation program to
be effective in 1994. The Performance Unit Plan (PUP) will be discontinued. No
new grants will be issued in 1994. The existing cycles, 1992-1994 and 1993-
1995, will run to their normal conclusion. For 1994, stock options will be used
as the sole long-term incentive. The Committee believes that stock options are
better motivators and better align the efforts of the executives with
objectives of the shareowners.
The second action was to enhance the retirement benefit for Mr. Bittner and
the Corporate Vice Presidents by the addition of a Supplemental Executive
Retirement Plan (SERP). The plan has an accrual and vesting schedule based on
years of service and age. The maximum benefit of 60% of final compensation,
less any amounts paid through the Company's Management Pension Plan and
Supplemental Management Pension Plan, will be paid to an executive retiring at
age 50 or older with 30 or more years of service.
The Committee has also established stock ownership guidelines for the
Company's executives. These guidelines are a multiple of salary. Mr. Bittner's
target, to be achieved over a five-year period, is the beneficial ownership of
Company common stock equal in value to four times his annual salary.
9
<PAGE>
This Committee is aware of the limitations which the Omnibus Budget
Reconciliation Act of 1993 places upon a corporation's ability to obtain a tax
deduction on executive compensation in excess of $1 million. Although it has
not yet developed a formal policy concerning the $1 million ceiling, this
Committee favors pay for performance and intends to continue to review
executive compensation in consideration of the legislation.
No member of this Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
Respectfully submitted,
/s/ Daniel E. Gill
Daniel E. Gill (Chairman)
Harlan D. Calkins
Richard P. Miller, Jr.
March 21, 1994
10
<PAGE>
PERFORMANCE GRAPH
The following graph charts the Company's cumulative total shareowner return
performance against the Standard and Poor's Telephone Index as well as against
the Standard and Poor's 500 Index. A variety of factors may be used in order to
assess a corporation's performance. This Performance Graph, which reflects the
Company's total return against the selected peer group, reflects one such
method. The performance of the Standard and Poor's Telephone Index is weighted
by the stock market capitalization of the companies within that peer group.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ROCHESTER, S&P TELEPHONE INDEX AND S&P 500 INDEX
<CAPTION>
Measurement period Rochester S&P Telephone S&P 500
(Fiscal year Covered) Telephone Corp. Index Index
- - - --------------------- --------------- -------- ------------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $ 100 $ 100 $ 100
FYE 12/31/89 $ 165 $ 158 $ 132
FYE 12/31/90 $ 125 $ 150 $ 127
FYE 12/31/91 $ 144 $ 163 $ 166
FYE 12/31/92 $ 168 $ 179 $ 179
FYE 12/31/93 $ 221 $ 207 $ 197
</TABLE>
11
<PAGE>
COMPENSATION OF COMPANY MANAGEMENT
The tables and other information set forth below are included to enable our
shareowners to better understand the compensation of the Company's executives.
These tables reflect the various forms of compensation paid the executive
officers of Rochester Telephone Corporation. Specifically, these are salary,
bonus, stock options and a long-term incentive plan. The Company does not
provide its executives with stock appreciation rights. The executive officer
titles in the Summary Compensation Table indicate the position held by those
officers on December 31, 1993. No executive officers exercised any stock
options during 1993.
The Report of the Committee on Management of the Board of Directors appears
on pages 8-10 of this Proxy Statement. This Report discusses the factors taken
into consideration to set Mr. Bittner's compensation and the compensation of
the other executive officers. A Performance Graph showing the performance of
the Company's stock as compared to the Standard and Poor's 500 Index and the
Standard and Poor's Telephone Index appears on page 11 of this Proxy Statement.
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation paid to the CEO and
the four most highly compensated executive officers of the Company for services
rendered to the Company and its subsidiaries over the past three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------
AWARDS
---------- PAYOUTS
ANNUAL COMPENSATION SECURITIES --------
------------------- UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS OPTIONS/ PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) SARS (#) ($)(3) ($)(4)
- - - ------------------ ---- ------------------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Bittner(1)........ 1993 $360,000 $407,500 23,000 $230,121 $26,856
Chairman, President 1992 292,750 160,000 8,000 8,946 14,901
& CEO 1991 220,000 103,600 -0- 25,439 12,230
D. M. Gregory(2)........ 1993 186,567 131,625 6,600 69,753 29,963
Corporate Vice President 1992 178,413 67,200 2,700 -0- 43,701
and President--
Telecommunication Group 1991 190,200 16,500 -0- -0- 7,479
L. L. Massaro........... 1993 174,800 131,625 4,500 95,662 11,721
Corporate Vice 1992 165,100 58,600 2,700 5,126 19,247
President--
Finance and Treasurer 1991 155,600 51,100 -0- 14,372 8,261
F. R. Pestorius......... 1993 173,700 131,625 4,500 99,452 12,611
Corporate Vice 1992 168,600 62,000 2,700 5,275 21,521
President--
Sales and Marketing 1991 159,800 57,900 -0- 15,013 10,352
J. K. Purcell........... 1993 175,600 131,625 6,300 98,589 12,033
Corporate Vice 1992 168,800 63,100 2,700 5,135 11,237
President--
Partnering and Alliances 1991 159,200 57,700 -0- 14,468 10,731
</TABLE>
- - - --------
(1) Mr. Bittner was named President and Chief Executive Officer effective
February 16, 1992. The compensation indicated for 1991 relates to his prior
position as Executive Vice President of the Company.
(2) Mr. Gregory became an employee and a Vice President of the Company
effective February 16, 1992. From July 1, 1991, until February 16, 1992, he
rendered consulting services as President of the Company's subsidiary RCI
Network Services, Inc. (RCINS). (In January, 1994, the name of this company
was changed to RCI Long Distance, Inc.) During the period January 8, 1991,
through June 30, 1991, he also rendered consulting services to RCINS, but
was neither an officer nor an employee of that company. This table reflects
payments made by the Company and/or RCINS in 1992 to Dale M. Gregory
Management Consultants, Inc., for these consulting services. The amount of
these payments was $29,687.
12
<PAGE>
(Summary Compensation Table footnotes continued)
(3) As described in more detail in the Report of Committee on Management at
page 9 of this Proxy Statement, 1993 Performance Unit Plan awards are
based upon performance achieved at 138.2% to 145% of the target levels.
(4) "All Other Compensation" includes imputed income from term life insurance
coverage and the Company's contributions to both the tax-qualified 401(k)
and nonqualified defined contribution plans. For 1993, imputed income from
term life insurance coverage was $3,456 for Mr. Bittner, $970 for Mr.
Gregory, $1,218 for Mr. Massaro, $2,004 for Mr. Pestorius, and $1,292 for
Mr. Purcell. The Company's 1993 contributions on behalf of the named
executive officers to the tax-qualified 401(k) and nonqualified defined
contribution plans, respectively, were as follows: $3,976 and $19,424 for
Mr. Bittner; $3,568 and $8,051 for Mr. Gregory; $6,745 and $3,758 for Mr.
Massaro; $3,116 and $7,491 for Mr. Pestorius; and $3,169 and $7,573 for
Mr. Purcell. For Mr. Gregory, "All Other Compensation" in 1991 and 1992
also includes travel and living expenses which were incurred by Mr.
Gregory as a consultant to the Company and were paid or reimbursed by the
Company. Additionally, in 1992, the amount includes a payment in the
amount of $35,000 negotiated for a non-compete agreement. In 1992, "All
Other Compensation" also includes special payments in the amounts of
$10,311 to Mr. Pestorius and $11,791 to Mr. Massaro. For Mr. Gregory in
1993, "All Other Compensation" includes a special payment in the amount of
$17,375. Each of these special payments was a reimbursement of personal
expenses incurred at the Company's request by the named executive officer
to further business opportunities.
The following companion tables to the Summary Compensation Table list the
stock options granted during the 1993 fiscal year to the named executive
officers, their stock option exercises in 1993 and the aggregate options they
held at the end of 1993, long-term incentive plan awards made to them during
1993, and the estimated retirement benefits which would be paid to them at age
65.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following Option Grant table includes two columns designated as
"Potential Realizable Value." The calculations in those columns are based on
hypothetical growth assumptions, proposed by the Securities and Exchange
Commission, of 5% and 10% for stock price appreciation for the option term.
There is no way to anticipate what the actual growth rate of the Company's
stock price will be.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1993
- - - ---------------------------------------------------------------------------------------------------
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED(1) (#) IN FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- - - ---- -------------- -------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Bittner........... 23,000 19.9% $38.125 3/15/03 $551,462 $1,397,513
D. M. Gregory........... 6,600 5.7% $38.125 3/15/03 $158,246 $ 401,025
L. L. Massaro........... 4,500 3.9% $38.125 3/15/03 $107,895 $ 273,426
F. R. Pestorius......... 4,500 3.9% $38.125 3/15/03 $107,895 $ 273,426
J. K. Purcell........... 6,300 5.4% $38.125 3/15/03 $151,053 $ 382,797
</TABLE>
- - - --------
(1) The option grants have the following material terms: exercise price is the
market price (based on the closing price of the Company's common stock on
the New York Stock Exchange) on the date of the option grant; 1/3 of the
options granted may be exercised commencing one year following the grant
date, a second 1/3 may be exercised commencing two years following the
grant date, and the remaining 1/3 may be exercised commencing three years
following the grant date. The option grant date was 3/15/93. Options may
not be transferred other than by will or the laws of descent and
distribution. An option may be exercised upon written notice to the
Company accompanied by payment in full for the shares being acquired. In
the event of a "change in control" as defined by the Executive Stock
Option Plan, all options become immediately vested and exercisable.
13
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY END SARS AT FY END(1)
------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
NAME (#) (#) ($) ($)
- - - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
R. L. Bittner............... 2,666 28,334 $36,658 $234,347
D. M. Gregory............... 900 8,400 $12,263 $ 70,725
L. L. Massaro............... 900 6,300 $12,263 $ 56,025
F. R. Pestorius............. 900 6,300 $12,263 $ 56,025
J. K. Purcell............... 900 8,100 $12,263 $ 68,625
</TABLE>
- - - --------
(1) Options are valued at the market value of RTC common stock at December 31,
1993, (closing price of $45.125) less the per share option exercise price,
multiplied by the number of exercisable/unexercisable options.
The following table shows the number of units of the Company's long-term
incentive plan which participants were awarded in the last fiscal year. The
information in the table is expressed in number of units unless otherwise
specified. At the end of the cycle, a participant's payout is based on the
value of these units multiplied by Company performance (measured as defined by
the long-term incentive plan and ranging from 0% to 150%) during the three-
year plan cycle. The threshold payout is .1% of the units awarded, the target
payout is 100% of the units awarded, and the maximum payout is 150% of the
units awarded. As noted in the Report of the Committee on Management on page 9
of this Proxy Statement, the long-term incentive plan will be discontinued
after conclusion of the existing performance cycles. For 1994, stock options
will be used as the sole long-term incentive.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR PERIOD UNTIL ----------------------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#)(1) OR PAYOUT (#) (#) (#)
- - - ---- ------------ ------------ ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
R. L. Bittner........... 3,065 Units 3 Years 3.07 Units 3,065.00 Units 4,597.50 Units
D. M. Gregory........... 984 Units 3 Years 0.98 Units 984.00 Units 1,476.00 Units
L. L. Massaro........... 937 Units 3 Years 0.94 Units 937.00 Units 1,405.50 Units
F. R. Pestorius......... 931 Units 3 Years 0.93 Units 931.00 Units 1,396.50 Units
J. K. Purcell........... 941 Units 3 Years 0.94 Units 941.00 Units 1,411.50 Units
</TABLE>
- - - --------
(1) The number of units granted for a performance cycle is based on the
participant's salary and RTC's stock price at the beginning of the cycle.
Cycle Performance is based on two equally weighted components. One
component compares RTC common stock's actual total return for the cycle to
the actual total market return of the Standard and Poor's 500 Index. The
other component ranks RTC common stock's risk adjusted total return
compared with a self-constructed group of sixteen telecommunications
companies. Each of the two components is given a performance range of 0%
to 150%. The cycle payout is a product of the stock price at the end of
the cycle, the average component performance, and the number of units
granted to the participant for the cycle. There is a cap on the end of the
cycle stock price used to calculate payouts to preclude extraordinary
gains to a participant in the event of major stock price movements.
14
<PAGE>
The following table shows the estimated annual benefits payable upon
retirement at age 65 to individuals in specified remuneration and years of
service classifications. The amounts set forth in this table do not reflect
early retirement incentives which the Company had previously offered certain of
its management employees. Furthermore, the amounts set forth are neither
subject to any deduction for Social Security benefits or any other offsets nor
adjusted to reflect maximum allowable benefits under the Internal Revenue Code.
All of the Company's officers, including those listed in the Summary
Compensation Table, are participants in the Company's Management Pension Plan
as supplemented by a Supplemental Management Pension Plan (SMPP). The annual
aggregate pension benefit for an officer under these Plans is based upon
several factors and is largely determined by the number of years of employment
multiplied by a percentage of the officer's three consecutive years of highest
average annual compensation preceding retirement.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION (15) (20) (25) (30) (35)
- - - ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000 $ 44,837 $ 59,782 $ 74,728 $ 89,673 $104,619
225,000 50,612 67,482 84,353 101,223 118,094
250,000 56,387 75,182 93,978 112,773 131,569
300,000 67,937 90,582 113,228 135,873 158,519
350,000 79,487 105,982 132,478 158,973 185,469
400,000 91,037 121,382 151,728 182,073 212,419
450,000 102,587 136,782 170,978 205,173 239,369
500,000 114,137 152,182 190,228 228,273 266,319
550,000 125,687 167,582 209,478 251,373 293,269
600,000 137,237 182,982 228,728 274,473 320,219
650,000 148,787 198,382 247,978 297,573 347,169
700,000 160,337 213,782 267,228 320,673 374,119
750,000 171,887 229,182 286,478 343,773 401,069
800,000 183,437 244,582 305,728 366,873 428,019
850,000 194,987 259,982 324,978 389,973 454,969
900,000 206,537 275,382 344,228 413,073 481,919
</TABLE>
Mr. Bittner, Mr. Gregory, Mr. Massaro, and Mr. Purcell each have executive
contracts which may pay a benefit in the event of a "Change in Control" of the
Company. These contracts are explained in detail on page 16 of this Proxy
Statement. Each of them also participates in the Company's Pension Plan. Under
SMPP, their service factor would include, subject to certain limitations, the
amount of service for which payment is made to them under their executive
contract.
The SMPP also provides that in the event of a Change in Control of the
Company, the Board may not terminate a participant's benefit and the Employees'
Benefit Committee may not change prior decisions regarding a participant's
service factor.
Effective January 1, 1994, the Company established a Supplemental Executive
Retirement Plan (SERP) which covers all the officers named in the preceding
tables plus two additional executive officers. The Plan has an accrual and
vesting schedule based on years of service and age. A maximum benefit of 60% of
final compensation will be paid to an executive retiring at age 50 or older
with 30 or more years of service. Payments made under the Company's Management
Pension Plan and the Supplemental Management Pension Plan are included in
determining the ultimate benefit payable under the SERP. However, in order to
qualify for the SERP benefit a covered executive must be at least 50 years of
age. Executive officers who are not at least 50 years old when they retire
would only receive the retirement benefits set forth in the above Pension Plan
Table and would receive no SERP benefit.
15
<PAGE>
For the purposes of these Plans, annual compensation is the same as that
given in the Salary and Bonus columns of the Summary Compensation Table for the
named executive officers. The number of years of employment of such individuals
for the purposes of these Plans currently are as follows: Mr. Bittner--31; Mr.
Gregory--15; Mr. Massaro--25; Mr. Pestorius--31; and Mr. Purcell--29.
Additionally, the Company has agreed to bridge Mr. Gregory's prior service with
other telecommunications companies provided he remains employed by Rochester
Telephone Corporation until January 1, 1997. Effective that date, the Company
will credit Mr. Gregory his additional six years and six months experience in
the telecommunications industry.
Neither Mr. Massaro nor Mr. Gregory has yet reached the age of 50 years.
Assuming they left the Company as of the current date, each would receive only
a deferred pension based upon the amount reflected in the Pension Plan Table
and neither would ever receive any additional benefit under the SERP. Mr.
Bittner and Mr. Pestorius have each reached the age of 50 years and have
accrued at least 30 years of service credit. If they retired as of the current
date, each would receive a full pension based on the amount reflected in the
Pension Plan Table. In addition, assuming annual compensation at the level each
received as of March 8, 1994, under the SERP Mr. Bittner would receive his full
pension plus an estimated annual SERP benefit of $66,996 and Mr. Pestorius
would receive his full pension plus an estimated annual SERP benefit of
$33,607. Although Mr. Purcell has reached the age of 50 years, his 29 years of
service credit entitles him only to a reduced pension rather than a full
pension. Assuming annual compensation at his March 8, 1994 level, if
Mr. Purcell were to retire as of the current date, he would receive a reduced
pension plus an estimated annual SERP benefit of $67,960. If Mr. Purcell
retired after achieving 30 years of service, he would be eligible for a full
pension. In that event, assuming annual compensation at the level he received
March 8, 1994, Mr. Purcell's estimated annual SERP benefit would only be
$37,535.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The members of the Committee on Management during the last completed fiscal
year were Mr. Calkins, Mr. Gill (Chairman), and Mr. Miller. None of these
persons were, during 1993 or previously, an officer or employee of the Company
or any of its subsidiaries.
The full Board of Directors accepted the recommendation of the Committee on
Management concerning Mr. Bittner's compensation. Mr. Hasselwander is a former
officer of the Company and, during 1993, he participated in those deliberations
of the registrant's Board of Directors in which the Board accepted the
Committee on Management's recommendations concerning executive officer
compensation. Mr. Hasselwander is not a member of the Committee on Management.
No executive officer of the Company has, during 1993 or previously, served as a
Director or member of the Compensation Committee of any other entity that has
an executive officer who serves or has served either as a member of the
Committee on Management or as a member of the Board of Directors of Rochester
Telephone Corporation.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into agreements, for an indefinite term, with Mr.
Bittner, Mr. Gregory, Mr. Massaro and Mr. Purcell. Each agreement provides
that, in the event of a change in control (as defined in the agreement) which
is followed within three (3) years by termination of employment under
circumstances other than one of the following: (i) death, (ii) retirement,
(iii) disability, (iv) termination by the Company for Cause (as defined in the
agreement), or (v) Voluntary Termination (as defined in the agreement), the
employee will be entitled to (a) continuation for three years of certain health
and life insurance benefits, and (b) a cash severance payment equal to three
(3) times the aggregate annual salary and bonus as determined under the
agreement. Additionally, in the event any of these amounts are determined to
trigger an Excise Tax (as defined in the agreement), the employee may also be
entitled to a Gross-Up Payment (as defined in the agreement). The employee is
also entitled to the above benefits if after a change in control the employee
terminates his employment for Good Reason (as defined in the agreement) or
during a "window period" (also as defined in the agreement). Mr. Bittner, Mr.
Gregory, Mr. Massaro, and Mr. Purcell would each receive their individual
severance payments in a lump sum.
16
<PAGE>
Executives who retired prior to January 1, 1994, received a combined Pre-
Pension Leave and Executive Pre-Pension Leave of up to twelve months' salary
and up to six months' service credit toward pension. This benefit was
discontinued for executives retiring after December 31, 1993. Mr. Pestorius was
eligible to retire at the end of 1993, with a full pension and an Executive
Pre-Pension Leave, and he had indicated to the Company his desire to do so. The
Company asked Mr. Pestorius to remain in the employ of the Company until at
least July 1, 1994, in order to transition to a successor those areas of the
business for which he is responsible. If Mr. Pestorius did so he would forego
the Executive Pre-Pension Leave to which he was entitled if he retired by
December 31, 1993.
In order to keep Mr. Pestorius whole and as an inducement for him to honor
the Company's request, Mr. Pestorius and the Company have entered into an
agreement under which Mr. Pestorius will receive a sum of money approximately
equal to one year's salary following his retirement from the Company, plus
service credit toward his pension. Additionally, Mr. Pestorius has agreed to
refrain from competing with the Company for a minimum of five years following
his retirement in exchange for a sum of money approximately equal to an
additional year's salary and bonus which will be made in installments over a
five-year period following his last day of active employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Please see page 3 for the discussion concerning Mr. Tomaino's affiliation
with a law firm which has provided legal services to the Company.
INDEMNIFICATION OF CERTAIN PERSONS
As authorized by New York State Law, the Company and its subsidiaries have
purchased insurance from the Chubb Group insuring such companies against
amounts they may pay as a result of indemnifying their officers and Directors
for certain liabilities such officers and Directors might incur. These
insurance policies also insure all officers and Directors of the Company and
its affiliates for additional liabilities against which such officers and
Directors may not be indemnified by the Company and its affiliates. The
insurance was renewed on May 7, 1993, for a period of one year. During 1993,
the Company paid $499,915 for this insurance and the renewal policy cost will
be negotiated in April, 1994.
PROPOSAL 2--ELECTION OF INDEPENDENT AUDITORS
The Company's independent auditors are Price Waterhouse. At the Annual
Meeting, the shareowners will consider and vote upon a proposal to elect
independent auditors for the Company's fiscal year ending December 31, 1994.
The Audit Committee of the Board of Directors, none of whose members is an
officer or employee of the Company, has recommended that Price Waterhouse be
re-elected as independent auditors for that year. The Board of Directors
unanimously recommends that shareowners vote FOR this proposal. Proxies
solicited by the Board of Directors will be voted FOR the foregoing proposal
unless otherwise indicated. Approval of this proposal will require the
affirmative vote of a majority of the votes cast at the Annual Meeting by the
holders of the common stock outstanding.
Representatives of Price Waterhouse will be present at the Annual Meeting to
make a statement, if they wish, and to respond to appropriate questions from
shareowners.
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF PRICE WATERHOUSE AS THE
COMPANY'S INDEPENDENT AUDITORS, DESIGNATED AS PROPOSAL 2 ON YOUR PROXY CARD.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF
THE DIRECTION THEREON TO THE CONTRARY.
17
<PAGE>
PROPOSALS TO MODIFY EMPLOYEE AND DIRECTOR COMPENSATION PLANS
The Company is requesting shareowner approval of several amendments and
modifications to existing employee and Director compensation plans. In general
the modifications are designed to increase the participants' ownership of
Company common stock or to facilitate the participants' disclosure document
filing obligations. These proposals are included on pages 18 through 23 of this
Proxy Statement as Proposals 3, 4, 5 and 6. Specifically, in the case of
Proposals 3 and 6, shareowner approval is requested to facilitate disclosure
document filing obligations of Plan participants who are either Directors or
executive officers of the Company. In the case of Proposals 4 and 5, shareowner
approval is requested to increase the number of shares available for stock
option grants and/or to approve an increase in the number of options granted
under the Plans. A brief summary of the intent of each proposal is presented
after the title of the proposal. As required by the regulations of the
Securities and Exchange Commission, there is also included a summary of the
material provisions of each Plan.
Copies of each of these Plans and any amendments to them will be available at
the meeting. They also will be sent to any shareowner upon written or oral
request. Shareowners should direct such requests to the Corporate Secretary at
the Company's office at Rochester Tel Center, 180 South Clinton Avenue,
Rochester, New York 14646. Alternatively, shareowners may request this material
via the Shareowner Line by calling 1-800-836-0342.
PROPOSAL 3--AMENDMENT TO THE SUPPLEMENTAL
RETIREMENT SAVINGS PLAN
SUMMARY OF PROPOSED ACTION
The Supplemental Retirement Savings Plan (the "Plan") is a retirement savings
plan for certain employees of Rochester Telephone Corporation. The amendment to
the Plan adds Rochester Telephone common stock as an investment vehicle which
may be elected by the participants. The Board of Directors has approved this
amendment. As stated earlier in this Proxy Statement, the Company has
established recommended stock ownership levels for its senior management based
upon a multiple of annual salary. Shareowner approval would facilitate the
periodic filings required by the stock acquisitions for certain Plan
participants who are officers of the Company.
INTRODUCTION
The Company's Supplemental Retirement Savings Plan (the "Plan") is a non-
qualified "top-hat" plan. Its principal purpose is to permit certain highly
compensated employees to contribute to retirement savings notwithstanding
limits imposed by the Internal Revenue Code on contributions made to tax-
qualified plans. Currently, there are 48 participants in the Plan and employer
matching contributions are approximately $120,000 per year. No contributions
are made for past service. All contributions to the Plan and the earnings on
the contributions are held in a "rabbi" trust.
SUMMARY OF PLAN PROVISIONS
The Plan automatically supplements the Employees' Retirement Savings Plan,
which is a broad-based 401(k) plan. The terms of the Plan primarily adopt and
mirror the terms of the 401(k) plan, with certain exceptions. First, the Plan
only covers 401(k) plan participants who earn above a specific level as defined
by Internal Revenue Service regulations. Currently this amount is $66,000 per
year. Second, the current investment options in this Plan are the Mariner Cash
Management Fund (a money market fund), the Vanguard Index Trust--500 Portfolio
(an S&P 500 index fund), the Merrill Lynch Capital Fund (a balanced fund), and
the Merrill Lynch Corporate Bond Fund (an intermediate bond fund). The Plan
amendment which is the subject of this Proposal 3 adds to these options a
Rochester Telephone Corporation Common Stock Fund. Third, contributions to this
Plan are solely pre-tax. The amount of these contributions equals the
18
<PAGE>
An aggregate of 1,000,000 shares of the Company's common stock will be
available for the grant of options under the Plan. The shares may be authorized
and unissued shares. If an option expires, terminates, or is cancelled without
being exercised, new options may thereafter be granted incorporating such
shares. No option will be granted more than ten (10) years after the effective
date of the Plan.
The exercise price under each option is not less than the fair market value
of the common stock at the time the option is granted. Options by their terms
are not transferable by the participant other than by will or the laws of
descent and distribution. Options become exercisable with respect to 33 1/3% of
the shares subject to the option on the first anniversary of the date of the
grant and with respect to an additional 33 1/3% of such shares on the second
and third anniversaries of such grant. ISOs expire automatically if not
exercised within ten (10) years following the date of grant. The maximum value
of common stock under which an ISO granted under this Plan or any other Company
plan which first becomes exercisable in any calendar year cannot exceed
$100,000.00.
In the event of a change in control of the Company, all of a participant's
ISOs or NQSOs become immediately vested and exercisable, unless directed
otherwise by resolution of the Board adopted prior to and specifically relating
to the occurrence of such change in control. Each participant also has the
right, exercised by written notice to the Company within sixty (60) days after
the change in control, to receive, in exchange for the surrender of the option
or any portion thereof to the extent the option is then exercisable, an amount
of cash equal to the difference between the fair market value (as determined by
the Board) on the date of surrender of the common stock covered by the option
or portion thereof which is so surrendered and the option price of such common
stock under the option.
PLAN AMENDMENTS
The restated Plan increases the Plan's authorized number of shares and
conforms certain provisions of the Plan to plans of a similar nature within the
telecommunication industry. The material differences between the prior Plan and
the restated Plan approved by the Board are set forth in the following table:
<TABLE>
<CAPTION>
AMENDED PLAN PRIOR PLAN
------------ ----------
<S> <C> <C>
Shares Available for Grant......... 1,000,000 300,000
Exercise rights following Three years One year
termination upon death............
Exercise rights following Automatic Three months
termination other than death or cancellation
retirement........................
Exercise rights following For duration of term Three months--ISOs;
retirement........................ one year--NQSOs
Employment transferred to Cellular Rights continue Treated as termination
Partnership with NYNEX............
Stock splits or other changes Awards adjust Board action required
affecting common stock............ automatically to adjust awards
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The Company has been advised by counsel that under present law the following
are the Federal income tax consequences generally arising with respect to
options granted under the Plan. The grant of an option will create no tax
consequences for an optionee or the Company. The optionee will have no taxable
income upon exercising an ISO (except that the alternative minimum tax may
apply), and the Company will receive no deduction when an ISO is exercised.
Upon exercising an option (other than an ISO), the optionee must recognize
ordinary income equal to the difference between the exercise price and the fair
market value of the stock on the date of exercise. The Company will be entitled
to a deduction for the same amount. The treatment of an optionee's disposition
of shares acquired through the exercise of an option depends on how
20
<PAGE>
amount that could have been contributed to the 401(k) plan but without various
statutory restrictions. Finally, Plan benefits can be paid out only at
termination of employment or at a fixed date specified by a participant when
the contribution is made. In addition, the form of benefit payment must be
elected at the time a contribution is made rather than at the time of
distribution.
PLAN AMENDMENTS
In August, 1992, the IRS issued new guidelines concerning rabbi trusts and
their associated non-qualified deferred compensation plans. These guidelines
permit rabbi trusts to invest in common stock of the sponsoring employer.
Effective July 1, 1993, in response to the expansion of permitted rabbi trust
investments, the Plan began to permit investments in Company common stock.
FEDERAL TAX CONSEQUENCES
Plan participants are not subject to current income taxes on contributions to
the Plan or on the income or gains on these contributions. These amounts do
constitute "wages" for purposes of Social Security taxes. A participating
company is not entitled to a current deduction for contributions made to this
Plan. In addition, the Company is subject to current income taxes on the income
and gains on investments held in the rabbi trust. Participants will be taxed on
all benefits they receive from the Plan. The Company will be entitled to take a
tax deduction for these same amounts at the time the participants recognize the
income for tax purposes.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE
SUPPLEMENTAL RETIREMENT SAVINGS PLAN, DESIGNATED AS PROPOSAL 3 ON YOUR PROXY
CARD. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE
ABSENCE OF THE DIRECTION THEREON TO THE CONTRARY.
PROPOSAL 4-- RESTATED EXECUTIVE STOCK OPTION PLAN
SUMMARY OF PROPOSED ACTION
Stock options are a form of compensation which clearly link financial reward
to Company performance. As discussed in the Report of Committee on Management
at page 9 of this Proxy Statement, the Company is replacing the existing long-
term incentive program with an increased stock option program. In order to have
sufficient options available for grant in future years, it is necessary for
shareowners to approve this Restated Executive Stock Option Plan (the "Plan")
which, among other modifications, will increase from 300,000 to 1,000,000 the
number of authorized shares which may be granted under this Plan. The Committee
on Management of the Company's Board of Directors has adopted the restated
Plan, subject to shareowners' approval. The New York State Public Service
Commission approved the restated Plan in open session on March 16, 1994, also
subject ultimately to shareowners' approval.
SUMMARY OF PLAN PROVISIONS
The Plan is a standard stock option plan which authorizes the grant to key
employees of options to purchase shares of Company common stock at its fair
market value as of the date of grant. The Plan was originally adopted by the
Board of Directors on November 20, 1989, and approved by shareowners on April
25, 1990. It covers approximately 55 employees who may be granted either
incentive stock options ("ISOs") or non-qualified stock options ("NQSOs") or a
combination of the two. Options with respect to 147,036 shares of common stock
were outstanding, as of March 8, 1994, to 50 employees.
A Committee of the Board of Directors (the "Committee") has discretion to
determine the identities of key employees who will participate and the timing
of the option grants. The Committee also has authority to determine whether the
granted options will be ISOs or NQSOs.
19
<PAGE>
long the shares have been held and on whether such shares were acquired by
exercising an ISO or by exercising an NQSO. Generally there will be no tax
consequences to the Company in connection with the disposition of shares
acquired under an option except that the Company may be entitled to a deduction
in the case of the disposition of shares acquired under an ISO before the
applicable holding periods have been satisfied.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF A RESTATED EXECUTIVE STOCK
OPTION PLAN, DESIGNATED AS PROPOSAL 4 ON YOUR PROXY CARD. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE DIRECTION THEREON
TO THE CONTRARY.
PROPOSAL 5--AMENDMENT TO THE DIRECTORS' STOCK OPTION PLAN
SUMMARY OF PROPOSED ACTION
An increased common share ownership in the Company by Directors will more
closely align their interests to those of our general shareowner population.
Based on management's recommendation, the Company's Board of Directors adopted
an amendment to the Directors' Stock Option Plan. Among other modifications,
the amendment increases from 1,000 to 2,000 the annual grant of options to
outside Directors and increases from 100,000 to 500,000 the number of shares
available to be issued in connection with this Plan. The increase in the number
of shares available to be issued in connection with this Plan is subject to
shareowners' approval. The New York State Public Service Commission approved
this amendment in open session on March 16, 1994, also subject ultimately to
shareowners' approval.
In order to have sufficient options available for grant in future years, it
is necessary for shareowners to approve this Plan amendment.
SUMMARY OF PLAN PROVISIONS
The Rochester Telephone Corporation Directors' Stock Option Plan (the "Plan")
was adopted by the Board of Directors on November 20, 1989, and approved by
shareowners on April 25, 1990. With two significant exceptions, the Plan is
substantially the same as the Executive Stock Option Plan discussed in Proposal
4. One of the exceptions is that Directors may be granted only non-qualified
options. The second exception is that the grant of options is not discretionary
with a Board Committee but is fixed by the terms of the Plan itself. As
originally adopted, the Plan provides for a non-discretionary grant to non-
employee Directors of a non-qualified option to purchase 1,000 shares of the
Company's common stock. Grants are made each year on the date of the Annual
Meeting electing Directors to the Board. Board members who begin service on the
Board on a date other than the date of the Annual Meeting are granted an option
to purchase a pro rata portion of 1,000 shares. All thirteen current non-
employee Directors currently participate in this Plan. The following is a
summary of the material provisions of the Plan.
Each option granted under the Plan is evidenced by an option agreement
between the individual Director and the Company. At the date each year that
Directors are elected to the Board, each Director so elected (whether newly
elected or continuing as a carryover Director) will receive an option to
purchase a fixed number of shares of the Company's common stock. The exercise
price under each option equals the fair market value of the common stock at the
time the option is granted. Options are not transferable by the participant
other than by will or the laws of descent and distribution. New options granted
under the Plan may become exercisable with respect to 33 1/3% of the shares
subject thereto on the first anniversary of the date of grant and with respect
to an additional 33 1/3% of such shares on the second and third anniversaries
of the grant.
21
<PAGE>
Notwithstanding any of the provisions of the Plan, in the event of a change
in control of the Company, all of a participant's options are immediately
vested and exercisable, unless directed otherwise by resolution of the Board
adopted prior to and specifically relating to the change in control. In the
event of a change in control, each holder of an exercisable option shall also
have the right at any time thereafter during the term of such option to
exercise the option in full, notwithstanding any limitation or restriction in
any option agreement or in the Plan. Each participant shall also have the
right, exercised by written notice to the Company within sixty (60) days after
the change in control, to receive, in exchange for the surrender of the option
or any portion thereof to the extent the option is then exercisable, an amount
of cash. This amount of cash will be equal to the difference between the fair
market value (as determined by the Board) on the date of surrender of the
common stock covered by the option or portion thereof which is so surrendered
and the option price of such common stock under the option.
PLAN AMENDMENTS
On November 16, 1993, the Board of Directors, acting upon the recommendation
of management, amended the Plan. The material differences between the prior
Plan and the restated Plan approved by the Board are set forth in the following
table:
<TABLE>
<CAPTION>
AMENDED PLAN PRIOR PLAN
------------ ----------
<S> <C> <C>
Shares Available for Grant......... 500,000 100,000
Annual Grant to Directors.......... 2,000 1,000
Exercise rights following
termination of service in event of
death, resignation due to conflict
of interest, or removal for cause. One year One year
Exercise rights following
termination other than death,
resignation due to conflict of
interest, or removal for cause.... For duration of term One year
Stock splits or other changes Awards adjust Board action required
affecting common stock............ automatically to adjust awards
</TABLE>
TAX CONSEQUENCES
For a discussion of the tax consequences of the options issued under the
Plan, see the description of NQSOs in Proposal 4.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF THIS AMENDMENT TO THE
DIRECTORS' STOCK OPTION PLAN, DESIGNATED AS PROPOSAL 5 ON YOUR PROXY CARD.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF
THE DIRECTION THEREON TO THE CONTRARY.
PROPOSAL 6--DIRECTORS' COMMON STOCK DEFERRED GROWTH PLAN
SUMMARY OF PROPOSED ACTION
The Directors' Common Stock Deferred Growth Plan (the "Plan") allows a
participating Director to defer some or all of the compensation received for
service on the Board. Amounts deferred under this Plan are invested in Company
common stock. This new Plan was approved by the Board of Directors effective
November 1, 1993. Shareowner approval of this Plan would facilitate the filing
of periodic stock acquisition disclosure for Company Directors who have elected
to participate in this Plan.
22
<PAGE>
SUMMARY OF PLAN PROVISIONS
On November 1, 1993, the Committee on Directors of the Company's Board of
Directors adopted the Rochester Telephone Corporation Directors' Common Stock
Deferred Growth Plan (the "Plan"). This new Plan is in addition to and mirrors
the Company's Plan for the Deferral of Directors' Fees. Both plans contain
virtually the same terms and conditions except with respect to the investment
of the deferred fees. The Plan for the Deferral of Directors' Fees provides for
deferral of fees into cash which is then credited with interest at a rate equal
to the rate which the Company pays on its customer deposits. The new Plan
permits Directors to defer some or all of the fees they earn as Company
Directors into Company common stock. The following is a summary of the material
provisions of the Plan.
The Plan is administered by the Board's Committee on Directors (the
"Committee"). The Committee has the authority to construe the Plan's terms and
to adopt rules and regulations for implementing the Plan. The Board of
Directors has the authority to amend or to terminate the Plan.
Any Director who is not also an employee of the Company or of a subsidiary is
eligible to participate in this Plan on a voluntary basis. As of the Plan's
November 1, 1993, effective date, thirteen Directors were eligible to
participate in the Plan, and as of December 31, 1993, seven Directors had
elected to participate.
An eligible Director may defer all or a portion of his or her Directors' Fees
into this Plan. Any such election must generally be made prior to the beginning
of the calendar year that the fees are to be earned by the Director. A
Director's deferral election must indicate when deferrals will commence, the
amount of the deferrals, and when payments are to be made.
At the present time, the Company has established a rabbi trust to meet its
obligations to accumulate and pay out the deferred fees and the earnings on
them. The deferred fees are paid to the trustee who uses the fees to purchase
shares of the Company's common stock on the open market at its then fair market
value. Dividends paid on the shares are used to purchase additional shares of
common stock.
Eligible Directors have a one-time right to transfer to this Plan amounts
previously deferred under the Company's Plan for the Deferral of Directors'
Fees. Amounts so transferred will be invested in shares of the Company's common
stock. The transferred amounts will, however, remain subject to the terms of
the election form the Director completed under the Plan for the Deferral of
Directors' Fees. None of the amounts transferred to this Plan, nor the amounts
deferred initially under this Plan, may be transferred back to the Plan for the
Deferral of Directors' Fees.
Payment of benefits from this Plan will be made in accordance with the terms
of a Director's election form. Payments will be made in whole shares of common
stock with fractional shares paid in cash.
The Company's obligation to pay deferred amounts is an unsecured promise. In
the event of the Company's bankruptcy or insolvency, the creditors of the
Company may reach any assets set aside to pay promised benefits, including any
assets held in the rabbi trust.
TAX CONSEQUENCES
Amounts deferred under this Plan are not subject to Federal income or Social
Security taxes at the time of deferral. Benefits paid from the Plan are subject
to both income and Social Security taxes in the year paid.
MANAGEMENT RECOMMENDS A VOTE FOR THE APPROVAL OF A DIRECTORS' COMMON STOCK
DEFERRED GROWTH PLAN, DESIGNATED AS PROPOSAL 6 ON YOUR PROXY CARD. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED IN THE ABSENCE OF THE
DIRECTION THEREON TO THE CONTRARY.
As required by regulations of the Securities and Exchange Commission, the
following table shows the benefits under each of the Plans described in
Proposals 3 through 6. The table indicates the Plan benefits which may be
received by or allocated for the named executive officers, the executive
officers as a group,
23
<PAGE>
Directors who are not executive officers, and Company employees who are not
executive officers. The benefits are expressed in either dollar values or
number of units. The Directors and executive officers will benefit from
approval of the Plans in which they participate.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DIRECTORS'
COMMON
SUPPLEMENTAL EXECUTIVE DIRECTORS' STOCK
RETIREMENT STOCK STOCK DEFERRED
SAVINGS OPTION OPTION GROWTH
NAME AND POSITION PLAN(1) PLAN(2) PLAN(3) PLAN(3)
- - - ----------------- ------------ --------- ---------- ----------
($) (#) (#) ($)
------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
R. L. Bittner
Chairman, President and CEO..... $ 19,424 37,000 N/A N/A
D. M. Gregory
Corporate Vice President and
President--Telecommunication
Group........................... $ 8,051 11,000 N/A N/A
L. L. Massaro
Corporate Vice President--
Finance and Treasurer........... $ 3,758 11,000 N/A N/A
F. R. Pestorius
Corporate Vice President--
Sales and Marketing............. $ 7,491 11,000 N/A N/A
J. K. Purcell
Corporate Vice President--
Partnering and Alliances........ $ 7,573 11,000 N/A N/A
Executive Group................. $ 49,897 103,000 N/A N/A
Non-Executive Director Group.... N/A N/A 22,000 $164,450(4)
Non-Executive Officer Employee
Group........................... $129,392 84,600 N/A N/A
</TABLE>
- - - --------
(1) All contributions are actual 1993 contributions.
(2) All amounts are 1994 projections.
(3) All amounts are 1994 projections. This Plan is available only to Directors
who are not employees of the Company.
(4) These amounts are normal Directors' fees and retainers otherwise payable
to Directors in 1994 which Plan participants have elected to defer into
this Plan.
OTHER MATTERS AND FUTURE PROPOSALS OF SHAREOWNERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present any matter for action at the Annual Meeting other than as
set forth in the Notice of Annual Meeting. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
In order to be eligible for inclusion in the proxy materials for the
Company's 1995 Annual Meeting of Shareowners, any shareowner proposal to take
action at such meeting must be received at the Company's principal executive
offices by November 23, 1994. Any such proposal should be addressed to 180
South Clinton Avenue, Rochester, New York 14646, Attention: Josephine S.
Trubek, Corporate Secretary. However, as described previously under the
caption "Information About the Board of Directors", shareowner suggestions for
nominees to be proposed by the Board of Directors for election as Directors at
next year's Annual Meeting will normally be considered if received by
September 1, 1994.
24
<PAGE>
The cost of the solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, certain of the officers and
employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone, facsimile, telegraph, or cable. The Company will
also request brokerage houses, nominees, custodians, and fiduciaries to forward
soliciting materials to the beneficial owners of stock held of record and will
reimburse such persons for forwarding such materials. In addition, the Company
has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey 07072-8017, to aid in the solicitation of proxies at a
fee of $3,500, plus reimbursement for out-of-pocket expenses incurred by that
firm on behalf of the Company.
Copies of the 1993 Annual Report have been mailed to shareowners. Additional
copies may be obtained from the Corporate Secretary, Rochester Telephone
Corporation, 180 South Clinton Avenue, Rochester, New York 14646.
25
