<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 20, 1994.
REGISTRATION NO. 33-51601
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ROCHESTER TELEPHONE CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 16-0613330
(STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER)
ORGANIZATION)
</TABLE>
------------------------
ROCHESTER TEL CENTER
180 SOUTH CLINTON AVENUE
ROCHESTER, NEW YORK 14646-0700
(716) 777-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
JOSEPHINE S. TRUBEK, ESQ.
CORPORATE SECRETARY
ROCHESTER TELEPHONE CORPORATION
ROCHESTER TEL CENTER
180 SOUTH CLINTON AVENUE
ROCHESTER, NEW YORK 14646-0700
(716) 777-6713
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
VINCENT PAGANO, JR., ESQ. PETER H. DARROW, ESQ.
SIMPSON THACHER & BARTLETT CLEARY, GOTTLIEB, STEEN & HAMILTON
425 LEXINGTON AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10017-3909 NEW YORK, NEW YORK 10006
(212) 455-2000 (212) 225-2000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE. PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF
1933, THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED
PROSPECTUS AND ALSO RELATES TO REGISTRATION STATEMENT NO. 33-40824 PREVIOUSLY
FILED BY THE COMPANY AND DECLARED EFFECTIVE ON JUNE 27, 1991. THIS REGISTRATION
STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT
NO. 33-40824 AND SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(C) OF THE
SECURITIES ACT OF 1933.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
JANUARY 20, 1994
PROSPECTUS
5,000,000 SHARES
ROCHESTER TELEPHONE CORPORATION
COMMON STOCK
($1.00 PAR VALUE)
Of the 5,000,000 shares of Common Stock of Rochester Telephone Corporation (the
"Company"), $1.00 par value per share (the "Common Stock"), offered hereby (the
"Offering"), 2,885,000 Shares are being sold by the Selling Stockholder and
2,115,000 Shares are being issued and sold by the Company. None of the proceeds
of the sale of Shares by the Selling Stockholder will be received by the
Company. See "Selling Stockholder."
The Common Stock is listed on the New York Stock Exchange under the trading
symbol "RTC." On January 19, 1994, the last reported sale price of the Common
Stock as reported on the New York Stock Exchange was $42.375. See "Price Range
of Common Stock and Dividends."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT COMPANY (1)(2) STOCKHOLDER
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total............................ $ $ $ $
- -----------------------------------------------------------------------------------------------------------
<FN>
(1) Before deducting expenses payable by the Company estimated at $371,000.
(2) The Company has granted the Underwriters a 30-day option to purchase up to
750,000 additional shares of Common Stock at the Price to Public, less the
Underwriting Discount, solely to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
</TABLE>
The Shares are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the right of the Underwriters to reject any order in whole or
in part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the Shares will be made at the office of Salomon
Brothers Inc, Seven World Trade Center, New York, New York, or through the
facilities of The Depository Trust Company, on or about , 1994.
SALOMON BROTHERS INC
LEHMAN BROTHERS
SMITH BARNEY SHEARSON INC.
The date of this Prospectus is , 1994.
<PAGE>
Two maps showing the location of the telephone properties,
cellular interests and long distance network of the Company.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy or information statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement of which this Prospectus forms a part, as well as reports, proxy
statements and other information filed by the Company, may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's regional offices at Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Reports and other information
concerning the Company can also be inspected at the office of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect to the Common Stock being offered pursuant to this
Prospectus. This Prospectus does not contain all information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning the provisions of any documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission, are
hereby incorporated by reference:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1992 and Amendment No. 1 thereto on Form 10-K/A;
2. Quarterly Reports on Form 10-Q of the Company for the fiscal
quarters ended March 31, 1993 (as amended), June 30, 1993 and September 30,
1993; and
3. Current Reports on Form 8-K, filed by the Company with the
Commission on February 3, 1993, March 19, 1993, July 9, 1993 and January 20,
1994.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the completion of the Offering being made hereby, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statements as modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (other than certain exhibits to
such documents). Requests for such documents may be made by writing Kristen H.
Jenks, Corporate Manager-Investor Relations, Rochester Telephone Corporation,
Rochester Tel Center, 180 South Clinton Avenue, Rochester, New York 14646.
3
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS. TERMS NOT DEFINED IN THIS SUMMARY ARE DEFINED ELSEWHERE HEREIN.
UNLESS OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS RELATING TO SHARE
DATA ASSUMES NO EXERCISE OF THE OVER-ALLOTMENT OPTION GRANTED TO THE
UNDERWRITERS.
THE COMPANY
Rochester Telephone Corporation (the "Company") is a major U.S. diversified
telecommunications company and the largest independent telephone company in New
York State. The Company's principal lines of business are regulated local
telephone operations ("Telephone Operations") and long distance, wireless and
other telecommunication services ("Telecommunication Services"). In addition to
the local exchange carrier in Rochester (the "Rochester Operating Company"),
Telephone Operations consists of 36 other local exchange companies, which
together with the Rochester Operating Company serve, as of December 31, 1993,
approximately 931,650 access lines in 14 states.
In 1988, the Company accelerated its strategy to diversify telephone
operations outside of New York State. Since that time, the Company has acquired
29 local telephone companies. Through effective marketing and operating
efficiencies, regional telephone operations have become a significant
contributor to profitability. The Company made the strategic decision in 1984 to
enter the long distance business, which it was free to enter because the Company
is not a Regional Bell Operating Company ("RBOC") and is not subject to the same
restrictions imposed upon an RBOC. In 1985, the Company entered the wireless
communications business. The Company now provides long distance voice, video and
data communications services in New York State, New England and the Mid-Atlantic
and Midwest regions, wireless communications serving a population of
approximately 4.3 million in five states, and designs, installs and maintains
integrated business communications systems, primarily in New York State.
The Company had total assets of approximately $1.5 billion at December 31,
1993. The Company's revenues grew from approximately $515 million for the year
ended December 31, 1988 to approximately $906 million for the year ended
December 31, 1993.
COMPETITIVE STRATEGY
The Company's strategy is to be the leading provider of integrated
telecommunication products and services to its customers, combining significant
capabilities in local telephone, long distance and wireless communications. As a
local service provider, the Company has a direct link to its customer base and
therefore an opportunity to market a broad array of telecommunications products
to its customers. The Company has upgraded its networks and information systems,
expanded its long distance business and increased its presence and investment in
the wireless communications business. The Company intends to pursue continued
growth through expansion of its existing business, development of value-added
products and selected acquisitions.
TELEPHONE OPERATIONS. 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 substantially digitized its switching networks. As a result,
the Company has developed an over 99 percent digital network in Rochester,
making it one of the largest digital cities in the United States. In its other
operating regions, the Company has on average over 91 percent digital
capability. In addition, the Company has been able to achieve substantial cost
reductions through elimination of duplicative services and procedures and
consolidation of administrative functions, reducing the number of employees per
ten thousand access lines by over 20 percent since 1988 to 37 as of December 31,
1993.
The Company is pursuing alternatives to provide broadband services to its
customers. To date, the Company has installed over 10,000 miles of fiber optic
cable in the Rochester area to provide its
4
<PAGE>
business customers with enhanced capacity and product capability. With respect
to residential customers, the Company is conducting marketing trials and testing
new technologies as exemplified by a true video on demand service utilizing a
hybrid fiber-optic/coaxial cable network, expected to be marketed to selected
customers in its Rochester service area during the second quarter of 1994.
TELECOMMUNICATION SERVICES. Telecommunication Services is comprised
primarily of RCI Long Distance, a regional interexchange carrier, and the
Company's affiliated long distance businesses ("RCI"), and the Company's
wireless communications operations ("Cellular Operations"). Since 1984, the
Company has expanded its long distance coverage area and product offerings, both
internally and through acquisitions. Today, RCI provides services through its
owned and leased digital transmission system, primarily to small-and
medium-sized businesses and residential customers in New York, New England and
the Mid-Atlantic and Midwest regions. RCI's business is expected to grow through
integration of long distance service with local exchange customers, additional
product offerings and geographic expansion.
Cellular Operations provides cellular and paging services in western New
York and, upon implementation of a proposed 50/50 joint venture (the
"Supersystem") with NYNEX Mobile Communications Company ("NYNEX") in early 1994,
will manage cellular systems in New York State serving a population of
approximately 4.3 million. The Supersystem will allow the Company to provide a
broad range of products to an enlarged service area through existing facilities
with a minimal incremental investment. The Company has additional nonmanaged
cellular interests in New York State and four other states serving a population
of approximately 2.1 million, and is a founding member of MobiLink, the
nationwide cellular consortium.
The Company is regulated by the New York State Public Service Commission
(the "NYSPSC"). In February 1993, the Company filed a petition for
reorganization with the NYSPSC to establish two new companies: a competitive
retail full-service telecommunications company, and a regulated wholesale
network company which would provide access to the Rochester network to all
telecommunications providers (the "Open Market Plan"). A holding company would
be the parent corporation of the two new companies. The Company considers this
unique operating structure to be a natural outgrowth of its current operations,
but cannot predict whether or when it will be approved by the NYSPSC and, if so,
in what form.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered by the Company............ 2,115,000 shares
Common Stock being offered by C FON Corporation (the 2,885,000 shares
"Selling Stockholder").............................
Shares of Common Stock to be outstanding after the 36,083,119 shares (1)
Offering...........................................
Use of proceeds to the Company....................... For general corporate purposes,
principally for the expansion of the
Company's businesses. See "Use of
Proceeds".
New York Stock Exchange Symbol....................... RTC
<FN>
- ------------------------
(1) Excludes 171,360 shares issuable pursuant to director and executive stock
option plans (of which options to purchase 14,806 shares are presently
exercisable) and up to 84,375 shares which may be issued as final payment
for an acquisition.
</TABLE>
5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
Set forth below are selected consolidated financial data of the Company for
each of the five years for the period ended December 31, 1993, derived from
financial statements of the Company which were audited by Price Waterhouse,
independent auditors. The selected financial data for each of the five years for
the period ended December 31, 1993 should be read in conjunction with the more
detailed financial information incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA:
TELEPHONE OPERATIONS:
Total Revenues.................................. $593,871 $567,272 $497,597 $417,520 $386,146
Operating Income................................ 164,271 152,032 131,741 109,703 104,240
Depreciation.................................... 99,995 100,692 86,467 72,588 60,538
Construction Expenditures....................... 86,479 114,906 98,927 93,816 94,920
TELECOMMUNICATION SERVICES:
Network Systems and Services Sales.............. 288,783 217,144 208,236 189,078 195,814
Wireless Communications Sales................... 29,586 21,113 17,038 13,048 12,039
Eliminations.................................... (5,790) (1,480) (9,312) (6,652) (3,654)
---------- ---------- ---------- ---------- ----------
Total Sales-Telecommunication Services........ 312,579 236,777 215,962 195,474 204,199
Operating Income-Network Systems and Services... 27,344 18,918 13,153 7,551 9,276
Operating Income-Wireless Communications........ 3,256 4,110 3,412 2,000 1,885
Eliminations.................................... 74 74 62 75 76
---------- ---------- ---------- ---------- ----------
Operating Income-Telecommunication Services... 30,674 23,102 16,627 9,626 11,237
Depreciation.................................... 14,816 13,335 12,081 8,584 8,239
Construction Expenditures....................... 15,677 8,941 9,657 15,403 17,078
CONSOLIDATED:
Net Revenues and Sales.......................... 906,450 804,049 713,559 612,994 590,345
Operating Income................................ 194,945 175,134 148,368 119,329 115,478
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 Primary:
Earnings before Extraordinary Items............. $2.42 $2.08 $2.31 $1.71 $1.94
Earnings per Common Share-Primary............... 2.42 2.05 2.43 1.71 2.86
Dividends Declared per Common Share............. 1.59 1.55 1.51 1.47 1.43
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
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
Share Owners' Equity............................ 675,099 621,594 604,431 487,491 455,391
OPERATING DATA:
Access Lines - Business......................... 262,138 238,643 226,668 181,877 167,584
Access Lines - Residential...................... 669,512 657,758 641,236 506,812 477,411
---------- ---------- ---------- ---------- ----------
Access Lines - Total.......................... 931,650 896,401 867,904 688,689 644,995
Average Daily Carrier Access Minutes of Use (in
thousands)..................................... 9,615 8,907 7,515 5,848 5,269
Telephone Employees............................. 3,444 3,885 3,915 3,251 3,020
Telephone Employees per 10,000 Access Lines..... 37 43 45 47 47
Net Cellular POPs (1)........................... 1,650,518 1,459,229 1,422,477 2,113,904 1,716,736
Long Distance Billable Minutes (in
thousands)(2).................................. 1,756,401 1,152,358 848,744 774,296 688,322
<FN>
- ------------------------------
(1) "Net Cellular POPs" means the population of a licensed cellular market based
on population estimates for such market, multiplied by the Company's
percentage ownership interest in the cellular licensee operating in such
market as of the date specified.
(2) Includes Long Distance North after 1991.
</TABLE>
6
<PAGE>
USE OF PROCEEDS
At an assumed public offering price of $42.375 per share, the net proceeds
to the Company from the sale of the Shares in the Offering are estimated to be
approximately $86.7 million ($117.5 million if the Underwriters' over-allotment
option is exercised in full). The Company will use the net proceeds of the
Offering for general corporate purposes, principally for the expansion of the
Company's businesses through internal growth, acquisitions, or a combination
thereof. The proceeds of the Offering may also be used to reduce indebtedness.
The Offering of the Shares by the Company has been approved by the NYSPSC,
subject to certain conditions, including the condition that the Company must
apply for NYSPSC approval before using any of the proceeds of the Offering for a
particular purpose. The Company cannot predict whether and on what terms the
approval for any particular use of proceeds will be obtained.
None of the proceeds of the sale of Shares by the Selling Stockholder will
be received by the Company.
7
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed and traded on the New York Stock Exchange (the
"NYSE") under the symbol "RTC". The number of holders of record of Common Stock
at December 31, 1993 was 20,759. In November 1993, the Board of Directors of the
Company announced an increase in the quarterly dividend to be paid on the Common
Stock to $.405 per share, payable on February 1, 1994 to holders of record on
January 14, 1994. The future payment of dividends is subject to the discretion
of the Board of Directors and dependent upon the Company's results of
operations, financial condition, cash requirements and other relevant factors.
The following table sets forth the high and low sale prices for the Common
Stock for the calendar quarters indicated as reported by the NYSE Composite
Tape, and the dividends declared per share on the Common Stock during each such
period.
<TABLE>
<CAPTION>
QUARTERLY
PRICE RANGE DIVIDENDS
-------------------- DECLARED
HIGH LOW PER SHARE
--------- --------- ----------
<S> <C> <C> <C>
1994:
First Quarter (through January 19, 1994)......................................... $ 44.88 $ 40.50 $ --
1993:
Fourth Quarter................................................................... 50.25 43.38 .405
Third Quarter.................................................................... 48.75 41.00 .395
Second Quarter................................................................... 43.50 36.50 .395
First Quarter.................................................................... 38.88 34.63 .395
1992:
Fourth Quarter................................................................... 35.75 30.63 .395
Third Quarter.................................................................... 32.88 30.25 .385
Second Quarter................................................................... 33.75 29.13 .385
First Quarter.................................................................... 34.00 30.13 .385
1991:
Fourth Quarter................................................................... 34.00 29.75 .385
Third Quarter.................................................................... 31.38 28.25 .375
Second Quarter................................................................... 31.50 29.00 .375
First Quarter.................................................................... 30.38 26.00 .375
</TABLE>
The last reported sale price of the Common Stock on the NYSE as of a recent
date is set forth on the cover page of this Prospectus.
On November 15, 1993, the Board of Directors of the Company approved a
2-for-1 split of the Company's Common Stock effective upon approval by
regulatory agencies, including the NYSPSC. The record and distribution dates for
the split, which will be effected in the form of a 100 percent stock dividend,
will be established after such regulatory approvals have been obtained, which
will not occur until after the completion of the Offering.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1993 and as adjusted to give effect to the issuance and sale of
2,115,000 shares of Common Stock offered by the Company hereby and the
application of the net proceeds therefrom.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Long-Term Debt...................................................................... $ 492,555 $
Share Owners' Equity:
Common stock...................................................................... 34,025
Capital in excess of par value.................................................... 201,591
Retained earnings................................................................. 418,889
------------- -------------
654,505
Less-Treasury stock, at cost........................................................ 2,191
------------- -------------
Common Share Owners' Equity......................................................... 652,314
Preferred stock..................................................................... 22,785
------------- -------------
Total Share Owners' Equity...................................................... 675,099
------------- -------------
Total capitalization.......................................................... $ 1,167,654 $
------------- -------------
------------- -------------
</TABLE>
9
<PAGE>
FINANCIAL OVERVIEW
CONSOLIDATED OPERATIONS
Historically, the Company's Telephone Operations have provided a majority of
the Company's overall 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 for these deregulated businesses has grown
to 16 percent of the Company's total operating income in 1993, compared with 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 wireless 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 are
accounted for using the equity method, as will be the proposed 50/50 cellular
joint venture with NYNEX. The Company will recognize its proportional share of
the net income (loss) of the cellular operations following 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
acquisitions. Of the $90.5 million increase in 1992, $56.7 million was related
to additional revenues associated with 1991 purchase acquisitions (see Note 2 to
the consolidated financial statements incorporated herein by reference to the
Company's Current Report on Form 8-K dated January 20, 1994 for further details
about the purchase 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 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 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 writeoff described in "Telephone
Operations", below).
The Company has elected to adopt Financial Accounting Standards Board
Statement No. 106, "Employers' Accounting for Post-retirement Benefits Other
Than Pensions" ("FAS 106"), using the delayed recognition of the transition
obligation method and will amortize this cost over a period of 20 years. The
adoption of this new standard resulted in approximately $11.9 million in
additional operating expenses in the year ended December 31, 1993. However, a
substantial portion of the increase was offset by a change in accounting for
pensions required for rate making purposes at the Rochester Operating Company.
The net impact of both accounting changes resulted in additional operating
expenses of $3.8 million for the year.
10
<PAGE>
The financial results for the three years include the impact of five
extraordinary and unusual items:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income, as stated.............................................................. $ 82,720 $ 69,431 $ 79,046
Adjustments, net of taxes
1.Tax law 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 law change............................................................... .06 -- --
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
--------- --------- ---------
--------- --------- ---------
</TABLE>
TELEPHONE OPERATIONS
Telephone Operations revenues increased 4.7 percent in 1993 and 14.0 percent
in 1992. Excluding purchase acquisitions, revenue increased 4.2 percent in 1992.
Revenue growth was partly driven by increases in access lines of 3.9 percent in
1993 and 3.3 percent in 1992. 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, long distance access rates per
minute of use 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 received in 1993 and
1992 at a selected number of non-New York State telephone companies, offset in
part by reduced revenue at the Rochester Operating Company in 1993. 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
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 Operating Company; an increase in wages and benefits due to the
addition of employees in key functional areas; increase in severance and other
expenses associated with streamlining operations to arrive at a reduced cost
structure; and increase in right-to-use fees associated with network software
upgrades. In 1992, expenses increased due to higher depreciation expenses and
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
11
<PAGE>
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 increased $75.8 million, or 32 percent, in
1993 and $20.8 million, or 9.6 percent, in 1992. Excluding the impact of
purchase acquisitions, sales rose 25.7 percent, or $60.9 million, and 7.6
percent, or $15.1 million, in 1993 and 1992, respectively. The increases 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 due to increased usage and market penetration, price increases
and new products. Sales from wireless services increased $8.5 million in 1993
and $4.1 million 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, 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.
The increase in 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 9.8 percent, 9.8 percent and 7.7 percent in 1993, 1992 and
1991, respectively. This positive trend was achieved through operating
synergies, new product offerings and a growing customer base.
INTEREST EXPENSE
Interest expense decreased $3.5 million, or 7 percent, in 1993 as a result
of both lower debt levels and interest rates relative to 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. The average cost of debt was 8.3
percent, 8.6 percent and 8.6 percent, in 1993, 1992 and 1991, respectively.
GAIN ON SALE OF ASSETS
In 1993, the company recognized gains on sales of 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, net other expense increased $6.9 million, or 47.9 percent, over
1992. This increase is primarily the result of additional administrative expense
associated with the reorganization petition filed with the NYSPSC, refinancing
expenses and acquisition expenses.
In 1992, the net change was an increase in expense of $3.8 million over
1991, primarily due to lower equity earnings in cellular partnerships and
increased goodwill amortization relating to purchase acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
One of the most important items in evaluating management's success is its
use of the Company's capital 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. The Company's liquidity is a function of its internal generation
of funds and access to securities markets, as well as its construction program
and debt service requirements.
The Company's primary source of funds is its net cash provided by operating
activities, which increased $12.2 million in 1993 and $52.9 million in 1992. The
increase in both years is attributable to
12
<PAGE>
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. In addition to funds from operations,
the Company accesses the securities markets to fund the expansion of its
business. The Company recently filed a debt shelf registration for up to $100
million of debt securities, none of which has been utilized at this time. The
Company has funded acquisitions primarily with newly issued stock.
The Company uses funds for its construction expenditures, acquisitions and
debt service requirements. Net cash used in investing activities decreased $12.4
million in 1993 and $148.8 million in 1992. The decline in 1993 was caused by a
reduction in construction expenditures offset in part by an increase in purchase
acquisitions. The decline in 1992 was due primarily to a $164.6 million decrease
in purchase acquisitions, offset in part by an increase of $15.3 million in
construction expenditures.The funding requirements associated with the telephone
acquisitions and network modernization programs have stabilized. Total gross
expenditures for property, plant and equipment in 1994 are anticipated to be
$58.3 million for Telephone Operations and $15.4 million for Telecommunication
Services.
The net cash used in financing activities increased $87.3 million in 1993
and $199.1 million in 1992. The changes in both years are attributable to
repayment/retirement of long term debt and the issuance of $239 million of long
term debt in 1991 associated with the Company's acquisition program. 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 incorporated herein by reference to the Company's Current Report on
Form 8-K dated January 20, 1994.)
The Company believes that internally generated funds will be sufficient to
fund its planned construction expenditures and to service its debt requirements.
Unless used to refinance outstanding debt, funds raised through the securities
markets, including the proceeds of the Offering, will be used principally for
expansion of the Company's business.
13
<PAGE>
BUSINESS OVERVIEW
GENERAL
The Company is a major U.S. diversified telecommunications company and the
largest independent telephone company in New York State. 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 properties of New York Telephone Company
located in the same general territory. The Company's principal lines of business
are Telephone Operations and Telecommunication Services. In addition to the
Rochester Operating Company, Telephone Operations consists of 36 other local
exchange companies, which together with the Rochester Operating Company serve,
as of December 31, 1993, approximately 931,650 access lines in 14 states.
In 1988, the Company accelerated its strategy to diversify telephone
operations outside of New York State. Since that time, the Company has acquired
29 local telephone companies. Through effective marketing and operating
efficiencies, regional telephone operations have become a significant
contributor to profitability. The Company made the strategic decision in 1984 to
enter the long distance business, which it was free to enter because the Company
is not an RBOC and is not subject to the same restrictions imposed upon an RBOC.
In 1985, the Company entered the wireless communications business. The Company
now provides long distance voice, video and data communications services in New
York State, New England and the Mid-Atlantic and Midwest regions, wireless
communications serving a population of approximately 4.3 million in five states,
and designs, installs and maintains integrated business communications systems,
primarily in New York State.
The Company seeks to maximize the integration of its local exchange, long
distance, wireless and other services within targeted geographic locations. As a
local service provider, the Company has a direct link to its customer base and
therefore a unique opportunity to market a broad array of telecommunications
products to its customers. The Company intends to pursue continued growth
through expansion of its existing businesses, development of value-added
products and selected acquisitions.
On November 3, 1993, the Company announced that it had initiated a corporate
restructuring to become more competitive, address the needs of specific market
segments and operate more cost-effectively. The restructuring will be achieved
in part through the coordination and consolidation of redundant systems, a
reduction in the number of customer service centers, and the streamlining of
management. In order to better serve its customers, the Company also
consolidated marketing functions in its Rochester market. In addition, the
Company reduced its work force by 7 percent during 1993, and continues to
evaluate further reductions in work force levels.
On December 20, 1993, the Company announced a series of transactions
designed to optimize its resources for future growth and profitability. In New
York State, the Company and NYNEX have agreed to contribute additional cellular
properties to the Supersystem which the Company will manage, including interests
in the Binghamton and Elmira markets. 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. All of the transactions are subject to various regulatory
approvals.
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.
TELEPHONE OPERATIONS
GENERAL
Through its Telephone Operations, the Rochester Operating Company and 36
wholly-owned local exchange companies serve, as of December 31, 1993,
approximately 931,650 access lines in 14 states. The local exchange carriers
provide local service, toll access and resale, the sale, installation and
maintenance of premises equipment, and directory services. Since the beginning
of 1988, the Company
14
<PAGE>
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 substantially digitized its switching networks. As
a result, the Company has developed an over 99 percent digital network in
Rochester, making it one of the largest digital cities in the United States. In
its other operating regions, the Company has on average over 91 percent digital
capability. In addition, the Company has been able to achieve substantial cost
reductions through elimination of duplicative services and procedures and
consolidation of administrative functions, reducing the number of employees per
ten thousand access lines by over 20 percent since 1988 to 37 as of December 31,
1993.
The table below sets forth certain information with respect to access lines
as of December 31, 1993:
<TABLE>
<CAPTION>
PERCENT OF ACCESS
TELEPHONE PROPERTIES AT LINES AT
DECEMBER 31, 1993 ACCESS LINES DECEMBER 31, 1993 PERCENT DIGITAL
- ------------------------------------------------------------ ------------- ------------------- ---------------
<S> <C> <C> <C>
Rochester, NY............................................... 506,522 54.4% 99%
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 3.7% 100%
TOTAL OTHER STATES...................................... 342,186 36.7% 91%
CONSOLIDATED ACCESS LINES............................... 931,650 100.0% 96%
------------- ------- ------
------------- ------- ------
<FN>
- ------------------------
(1) These companies also have properties in one or more other states (Florida,
Iowa and Ohio).
</TABLE>
The Company operates 71 central office and remote switching centers in
Rochester, 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 the telephone companies'
operating territories is provided by interconnection with the lines of
interexchange carriers. As part of the Company's ongoing strategy to provide a
greater selection of value-added products, it introduced advanced services such
as caller ID, distinctive ringing, directory-assisted call completion and voice
mail during 1992 and 1993.
The Company is pursuing alternatives to provide broadband services to its
customers. To date, the Company has installed over 10,000 miles of fiber optic
cable in the Rochester area to provide its business customers with enhanced
capacity and product capability. With respect to residential customers, the
Company is conducting marketing trials and testing new technologies as
exemplified by a true video on demand service utilizing a hybrid
fiber-optic/coaxial cable network, expected to be marketed to selected customers
in its Rochester service area during the second quarter of 1994.
Pursuant to its integration strategy, the Company has developed a new
program known as "Visions Long Distance", whereby its local exchange companies
resell RCI's long distance services under the local companies' names. The
Company believes that customers prefer the convenience of obtaining their long
distance service through their local company and receiving a unified bill. The
Company
15
<PAGE>
introduced Visions Long Distance at nine local exchange companies in 1993 and
intends to roll out the program to additional subsidiaries in 1994. The results
of Visions Long Distance operations are included as part of the
Telecommunication Services segment.
The Company can be considered the only provider of basic local exchange
service in the various geographic areas in which it has telephone properties,
including its largest holding in Rochester. Competition in local exchange and
toll services is being facilitated by changing technology and regulation; as
such, there are currently entities which have the ability to provide dial tone
and basic service in limited areas, including Rochester. To benefit from these
technological advances and broaden the scope and quality of its own competitive
offerings, the Company has increased its digital, fiber and switching capacity
throughout its networks and is pursuing regulatory alternatives such as the Open
Market Plan.
OPEN MARKET PLAN
On February 3, 1993, the Company filed the Open Market Plan with the NYSPSC,
which would open the Rochester local exchange market to competition. The Company
was the first telephone 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 company and have a broad selection of products, services
and prices. It would also give the Company flexibility to broaden the scope and
quality of its own competitive offerings.
Under the 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 telecommunications service ("R-Com"). R-Net
and R-Com would be subsidiaries of the Company, which would become a holding
company and would continue to hold the remaining assets of the Company,
primarily investments in subsidiaries. The holding company structure would
provide financial flexibility for the Company to continue the acquisition and
diversification efforts necessary for its long-term growth.
R-Net would be a fully regulated company and would sell basic network
services such as access to the network, transport between offices and switching
to R-Com and all other local telecommunications companies. These retail
companies would then package the services for resale to local customers. The
proposed wholesale rates unbundle network services into functional elements for
purchase by the retailers. As proposed, R-Net would offer discounts based on
usage per line and term commitment and a short-term cap on residential flat rate
service.
R-Com would be a full service provider of a broad array of integrated
telecommunications 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
into services such as flat rate service, measured rate service, Centrex and
ISDN. The Company intends that R-Com would eventually offer its products and
services outside of its existing markets.
The Open Market Plan must be approved by NYSPSC, which approval is not
expected until the second half of 1994. If the Open Market Plan is approved,
retail providers of local telephone services may be selected by consumers
through a ballot process. 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.
16
<PAGE>
TELECOMMUNICATION SERVICES
GENERAL
Telecommunication Services is comprised of network systems and services,
which includes long distance services and a customer premises equipment
business, and Cellular Operations, which provides wireless communications. The
Telecommunication Services contribution to the Company's total revenues has
increased, accounting for 34 percent of total revenues for the year ended
December 31, 1993. The Company seeks to expand through increasing its existing
commercial and residential customer base, developing new products, and
acquisitions.
LONG DISTANCE
The Company provides long distance services through RCI. RCI routes long
distance traffic over its 100 percent digital state-of-the-art network. The
Company owns and operates seven switching sites, located in Rochester, New York
City, Washington, D.C., Philadelphia, Cleveland, Burlington, Vermont and
Manchester, New Hampshire, and is currently installing a switch in Chicago.
RCI's switched services include basic long distance or measured toll service,
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 serves primarily small-to medium-sized businesses and residential
customers in New York, New England and the Mid-Atlantic and Midwest regions.The
majority of RCI's revenues are derived from small-to medium-sized business
customers, whose calling volume consists primarily of calls made during regular
business hours.
Within the past year RCI has implemented marketing and service development
efforts intended to expand its share of the residential long distance market.
RCI now offers residential customers low, simplified rates, direct dialing for
nationwide and international calls, 24-hour customer service, and unified
billing from the local exchange carrier. As part of its residential strategy,
RCI has significantly increased residential usage through its "Visions Long
Distance" program (as described in "Telephone Operations-General") whereby RCI's
long distance services are marketed through Company-owned as well as
nonaffiliated local exchange service providers. Through the Visions Long
Distance program, the Company has achieved penetration in excess of 50 percent
in initial markets as a result of customer preference for unified billing and
local exchange company customer service. Because residential long distance
traffic peaks in the evenings, on weekends and on holidays, when commercial
traffic tends to be lowest, expanding residential business increases revenues
with virtually no need to increase existing switching and transmission
facilities.
RCI focuses its marketing efforts in five key regions: Rochester, New York
State, New England and the Mid-Atlantic and Midwest regions. In these regions,
RCI markets its products through its affiliated local exchange carriers, a
direct sales force and direct marketing campaigns. RCI has introduced a number
of programs designed to attract new long distance customers. The "Budget Call"
feature enables any telephone user to dial an access code and complete a call
through RCI's long distance network, with the cost of the call to be billed on
the customer's local telephone company statement. The rates for such calls are
typically 10 percent lower than the rates charged by the major long distance
carriers. Budget Call will be available in six to ten states in 1994.
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, and began to utilize the Budget Call program,
described above, throughout its long distance markets. On September 30, 1993,
the Company completed the purchase of Mid Atlantic Telecom, Inc., ("Mid
Atlantic"), a
17
<PAGE>
facilities-based interexchange carrier headquartered in Washington D.C. with
operations in New England and the Mid-Atlantic region. Mid Atlantic has more
than tripled its revenue in the past five years, to $21 million for the twelve
months ended September 30, 1992. Both purchases served to implement RCI's
strategy to expand its markets and to broaden product offerings in existing
territories.
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 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, including billing
and customer information.
WIRELESS COMMUNICATIONS
Since 1985, the Company has been providing cellular and paging service in
the Rochester Metropolitan Statistical Area ("MSA"), which has a population of
approximately one million, in a partnership with ALLTEL Corporation in which
Cellular Operations has an 85 percent interest. Cellular Operations currently
operates and maintains 25 cell sites in the Rochester MSA. In addition, in April
1993 Cellular Operations acquired a 70 percent interest in a cellular system
serving the Utica-Rome MSA, and also has investments in wireless properties
elsewhere in New York and in Alabama, Georgia, Illinois and Iowa. Cellular
Operations is also a member of the MobiLink marketing alliance, a nationwide
consortium of wireless operators. The objective of Cellular Operations is to
invest in cellular properties adjacent to existing Company-owned properties or
when a controlling interest can be obtained.
Cellular Operations has been profitable since its first full year of service
in the Rochester market, its largest market, despite intense price competition
during the buildout of its network. As prices per minute have approximately
doubled from their lowest level in 1989, Cellular Operations was able to
increase margins by maintaining its efficient cost structure.
On March 12, 1993, the Company and NYNEX signed a definitive agreement to
launch the Supersystem in upstate New York, which is scheduled to begin
operations in early 1994. The Company will serve as the initial operating
partner of the 50/50 joint venture.The Company will contribute its cellular
properties in Rochester and Utica-Rome and its Rochester area paging operations,
and NYNEX will contribute its cellular properties in Buffalo, Syracuse,
Utica-Rome and New York State Rural Statistical Area ("RSA") No. 1. The parties
propose to amend the definitive agreement to include the Binghamton and Elmira
MSAs. By combining marketing and service efforts and integrating networks,
Cellular Operations and NYNEX will be able to provide seamless cellular service
to a population of more than 4.5 million in upstate New York. The Supersystem
has been approved by the 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.
Cellular systems compete principally on the basis of network quality,
customer service, price and coverage area. The Company's chief competition in
each market is from the other cellular licensee in such 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").
Pursuant to the FCC's decision, seven new licenses will be granted: 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.
18
<PAGE>
The Company owned the following cellular properties as of December 31, 1993:
<TABLE>
<CAPTION>
1993 CURRENT PENDING PENDING
ESTIMATED OWNERSHIP ADJUSTED OWNERSHIP ADJUSTED
MARKET POPULATION INTEREST POPULATION INTEREST POPULATION
- ------------------------------------------------ ----------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
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............. 4,312,000 1,288,700 1,695,600
<FN>
- ------------------------------
* Company managed systems.
** Additional Company managed systems pending completion of the Supersystem in
1994.
</TABLE>
OTHER
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 offer for sale 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
telecommunications supply venture with Anixter Bros., Inc.
REGULATION
The Company's telephone operating companies are subject to the jurisdiction
of the various state regulatory authorities in each of the respective states in
which they operate, with respect to intrastate rates, facilities, services,
reports and issuance of securities and other matters.
The Rochester Operating Company's local exchange operations in Rochester
over the last few years have generally functioned under incentive regulation;
that is, rate payers share in earnings above a certain percentage, in the form
of rebates. While such plans generally lock in rates at specified levels
(subject to annual adjustment), there is some relief if the NYSPSC changes its
rules or if other mandatory changes affect earnings. Under a September 1993
proposal currently being considered by the NYSPSC the Rochester Operating
Company would defer 50 percent of its earnings beginning January 1, 1994 to the
extent such earnings are above the allowed rate of return on equity of 10.9
percent, subject to a number of adjustments. The disposition of any earnings in
excess of the threshold will be determined in the Open Market Plan proceeding.
If the Company earns less than the allowed rate of return in 1994, it would be
permitted to recover certain cost increases up to the level of the allowed
return.
19
<PAGE>
The other New York local exchange companies and the Company's telephone
companies outside of New York State predominantly operate under rate-of-return
regulation, although some jurisdictions have moved or may move to incentive
regulation.
The Company and the NYSPSC entered into a financing agreement, or
Stipulation, in 1986 to allow the Company flexibility to pursue acquisitions and
to fulfill financing requirements of existing subsidiaries. The Stipulation was
amended in 1988 to accommodate additional acquisitions and again in 1991 in
conjunction with the acquisition of the Centel telephone properties. Portions of
the 1991 amendment to the agreement expired on June 17, 1993. On April 27, 1993,
the Company petitioned the NYSPSC to extend the June 17 expiration date to
December 31, 1993. On August 4, 1993 the NYSPSC granted the extension. Starting
in 1994, the Company will look to the Open Market Plan and, in its absence,
case-by-case applications to the NYSPSC to provide the needed financing and
acquisition flexibility.
The NYSPSC issued an order on July 6, 1993 which imposed a royalty on the
Company in the amount of 2 percent of the total capitalization of the Company's
unregulated operations, on the theory that the Company's ratepayers should
benefit from competitive advantages accrued by the non-regulated operations' use
of the name and reputation of the Company and in order to make up for possible
inaccuracies in the reimbursement of regulated operations by unregulated
affiliates. Based upon an initial interpretation of the order, the Company
estimates that its effect is in the range of $2.0 million per year. The Company
disputes the justification for the royalty proposal which would be treated as an
offset to the Rochester Operating Company's regulated revenue requirement from
regulated intrastate telephone operations. The Company intends to vigorously
defend against the royalty imposition and has filed an appeal with the New York
State Supreme Court. The Company cannot predict the outcome of the appeal.
Effective May 25, 1984, the FCC approved an access charge plan which changed
the way local telephone operating companies are compensated for their interstate
toll investment and related expenses. Access charges are collected from access
line customers through monthly end-user subscriber line charges and from all
long distance carriers through usage based rates. Effective July 1, 1991, the
Company elected to become subject to price cap regulation by the FCC with
respect to its interstate access revenue. This allowed the Company increased
pricing flexibility among interstate services while tying overall price level
changes to inflation and productivity constraints.
For additional information on regulation matters, see "Business --
Regulation" in the Company's Annual Report on Form 10-K, as amended, for the
year ended December 31, 1992, incorporated by reference herein.
SELLING STOCKHOLDER
Of the shares of Common Stock being offered hereby, 2,885,000 shares are
being sold by C FON Corporation (the "Selling Stockholder"), a direct wholly
owned subsidiary of Centel Corporation, which is, in turn, a direct wholly owned
subsidiary of Sprint Corporation. Prior to the Offering, the Selling Stockholder
is the owner of record of 2,885,000 shares, or 8.5 percent, of the Company's
Common Stock, all of which is being sold in the Offering. The Selling
Stockholder received the Shares being sold by it from Centel Corporation, which
received such Shares in 1991 in exchange for certain telephone properties in
Minnesota and Iowa.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $1.00 par value, and 850,000 shares of cumulative preferred
stock, $100 par value (the "Cumulative Preferred Stock") issuable in series.
Common Stock of the same class as the Common Stock being offered hereby is
registered pursuant to Section 12(b) of the Exchange Act.
20
<PAGE>
The following summary description of capital stock is not intended to be
complete and is qualified by reference to the provisions of the Company's
Restated Certificate of Incorporation, as amended, (the "Certificate of
Incorporation") and By-laws and by New York law.
As of December 31, 1993 there were 33,968,119 shares of Common Stock and
200,000 shares of Cumulative Preferred Stock, constituting three series (the
5.00% Series, 5.65% Series and 4.60% Series), outstanding. Dividends may be
declared and paid on the Common Stock out of legally available surplus. However,
no dividends may be paid on the Common Stock until accrued and unpaid dividends
on the Company's outstanding series of Cumulative Preferred Stock have been paid
or declared and funds set aside for their payment. On any liquidation of the
Company, the holders of the Cumulative Preferred Stock are entitled to $100 per
share plus accumulated dividends. After satisfaction of outstanding liabilities
and of the preferential liquidation rights of the Cumulative Preferred Stock,
the holders of the Common Stock are entitled to share ratably in the
distribution of all remaining assets.
The holders of the Company's Common Stock have exclusive voting rights of
one vote for each share held, subject to the voting rights of the outstanding
Cumulative Preferred Stock described below. The holders of the Company's Common
Stock are not entitled to cumulative voting in the election of directors. When
four or more quarterly dividends on the Cumulative Preferred Stock are in
arrears, and until such arrearage at full dividend rates have been paid or
declared and set apart for payment, the holders of the Cumulative Preferred
Stock as a class have the right to elect a majority of the Board of Directors.
In such event, the holders of the Company's Common Stock have the right to elect
only the remaining directors. In addition, the affirmative vote of various
proportions of the Cumulative Preferred Stock is required to (1) increase the
authorized amount of the Cumulative Preferred Stock; (2) create shares having
preferential rights equal or superior to the Cumulative Preferred Stock; (3)
issue any shares of Cumulative Preferred Stock or any shares having preferential
rights equal or superior to the Cumulative Preferred Stock without compliance
with certain requirements as to earnings; and (4) create, alter or abolish any
voting rights or preferential rights or redemption provisions affecting the
Cumulative Preferred Stock adversely.
Holders of Common Stock have no pre-emptive rights, subscription rights,
conversion rights or redemption rights. All shares of Common Stock presently
outstanding are fully paid and non-assessable.
The Company's Common Stock is listed on the NYSE under the Symbol "RTC". The
transfer agent and registrar for the Common Stock is First Chicago Trust Company
of New York.
21
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company and the Selling Stockholder agreed to sell to each of the
Underwriters named below (the "Underwriters"), and each of the Underwriters for
whom Salomon Brothers Inc ("Salomon"), Lehman Brothers Inc. and Smith Barney
Shearson Inc. are acting as representatives (the "Representatives"), have
severally agreed to purchase from the Company and the Selling Stockholder, the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- -----------
<S> <C>
Salomon Brothers Inc.............................................................
Lehman Brothers Inc..............................................................
Smith Barney Shearson Inc. ......................................................
-----------
Total........................................................................ 5,000,000
-----------
-----------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the
above-listed shares of Common Stock offered hereby if any such shares are
purchased. In the event of a default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated. The Company and the Selling Stockholder have been advised by the
Representatives that the several Underwriters propose initially to offer such
shares to the public at the public offering price set forth on the cover page of
this Prospectus, and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share. After the initial
offering, the public offering price and such concessions may be changed.
The Company and the Selling Stockholder have agreed not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
the offering of, any other shares of Common Stock, or securities convertible
into or exchangeable for shares of Common Stock, except the shares of Common
Stock offered in the Offering for a period of 120 days following the
commencement of the Offering without the prior written consent of Salomon;
PROVIDED, HOWEVER, that the Company may issue and sell Common Stock pursuant to
any director or employee stock option plan, stock ownership plan, or dividend
reinvestment plan of the Company in effect at the time of commencement of the
Offering, the Company may issue Common Stock issuable upon the conversion of
securities or the exercise of warrants outstanding at the time of commencement
of the Offering, and the Company may issue Common Stock as final payment for an
acquisition.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 750,000
shares of Common Stock from the Company at
22
<PAGE>
the same price per share as the initial 5,000,000 shares of Common Stock to be
purchased by the several Underwriters. The Underwriters may exercise such option
only to cover over-allotments in the sale of the shares they have agreed to
purchase. To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase the same proportion of the option shares as the number of shares of
Common Stock to be purchased and offered by such Underwriter in the above table
bears to the total number of shares of Common Stock initially offered by the
Underwriters.
The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the Underwriters against certain liabilities and
expenses, including liabilities under the Securities Act, or contribute to
payments that the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock will be passed upon for the
Company by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. Certain legal matters relating to the shares
of Common Stock offered hereby will be passed upon for the Underwriters by
Cleary, Gottlieb, Steen & Hamilton, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1993, 1992 and 1991 and for each of the three years in the period ended December
31, 1993 incorporated by reference to the Company's Current Report on Form 8-K
dated January 20, 1994 in this Prospectus have been so incorporated in reliance
upon the report of Price Waterhouse, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
23
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 3
Incorporation of Certain Information by
Reference..................................... 3
Prospectus Summary............................. 4
Use of Proceeds................................ 7
Price Range of Common Stock and Dividend
Policy........................................ 8
Capitalization................................. 9
Financial Overview............................. 10
Business Overview.............................. 14
Selling Stockholder............................ 20
Description of Capital Stock................... 20
Underwriting................................... 22
Legal Matters.................................. 23
Experts........................................ 23
</TABLE>
5,000,000 SHARES
ROCHESTER TELEPHONE
CORPORATION
COMMON STOCK
($1.00 PAR VALUE)
[LOGO]
SALOMON BROTHERS INC
LEHMAN BROTHERS
SMITH BARNEY SHEARSON INC.
PROSPECTUS
DATED _______ __, 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate (except for the Registration fee) of the fees
and expenses payable by the Company in connection with the Offering:
<TABLE>
<S> <C>
Registration fee................................................... $ 46,557
Blue sky fees and expenses......................................... 12,000
Printing and engraving expenses.................................... 50,000
Legal fees and expenses............................................ 130,000
NYSE listing fees.................................................. 35,800
Accounting fees and expenses....................................... 20,000
Transfer Agent and Registrar's fees and expenses................... 1,500
Miscellaneous...................................................... 75,143
---------
Total............................................................ 371,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Business Corporation Law of the State of New York ("BCL") provides that
if a derivative action is brought against a director or officer, the Company may
indemnify him or her against amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him or her in connection with the defense
or settlement of such action, if such director or officer acted in good faith
for a purpose which he or she reasonably believed to be in the best interests of
the Company, except that no indemnification shall be made without court approval
in respect of a threatened action, or a pending action settled or otherwise
disposed of, or in respect of any matter as to which such director or officer
has been found liable to the Company. In a nonderivative action or threatened
action, the BCL provides that the Company may indemnify a director or officer
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees incurred by him or her in defending such action if
such director or officer acted in good faith for a purpose which he or she
reasonably believed to be in the best interests of the Company.
Under the BCL, a director or officer who is successful, either in a
derivative or nonderivative action, is entitled to indemnification as outlined
above. Under any other circumstances, such director or officer may be
indemnified only if certain conditions specified in the BCL are met. The
indemnification provisions of the BCL are not exclusive of any other rights to
which a director or officer seeking indemnification may be entitled pursuant to
the provisions of the certificate of incorporation or the bylaws of a
corporation or, when authorized by such certificate of incorporation or bylaws,
pursuant to a shareholders' resolution, a directors' resolution or an agreement
providing for such indemnification.
The above is a general summary of certain provisions of the BCL and is
subject, in all cases, to the specific and detailed provisions of Sections
721-725 of the BCL.
Article II, Section 12, of the Company's Bylaws contains provisions
authorizing indemnification by the Company of directors and officers against
certain liabilities and expenses which they may incur as directors and officers
of the Company or of certain other entities.
Section 726 of the BCL also contains provisions authorizing the Company to
obtain insurance on behalf of any such director and officer against liabilities,
whether or not the Company would have the power to indemnify against such
liabilities. The Company maintains Executive Liability and Defense coverage
under which the directors and officers of the Company are insured, subject to
the limits of the policy, against certain losses, as defined in the policy,
arising from claims made against such directors and officers by reason of any
wrongful acts as defined in the policy, in their respective capacities as
directors or officers.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (to be filed by amendment).
1.2 -- Form of Sprint Corporation Letter (to be filed by amendment).
1.3 -- Form of Centel Corporation Letter (to be filed by amendment).
3.1 -- Restated Certificate of Incorporation with all Amendments (incorporated by
reference to Exhibit 3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1980).
3.2 -- Certificate of Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3-2 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1984).
3.3 -- Certificate of Change to Certificate of Incorporation (incorporated by reference
to Exhibit 3-4 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1988).
3.4 -- Certificate of Amendment to Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3-5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1990).
3.5 -- By-laws (incorporated by reference to Exhibit 3-3 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992).
5.1 -- Opinion of Simpson Thacher & Bartlett regarding the legality of the shares of
Common Stock being registered (filed herewith).
23.1 -- Consent of Price Waterhouse (filed herewith).
23.2 -- Consent of Simpson Thacher & Bartlett (filed previously).
24.1 -- Power of Attorney (filed previously).
</TABLE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted against
the registrant by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The registrant hereby undertakes:
1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497
(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
it has reasonable grounds to believe that it meets all requirements for filing
on Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Rochester,
State of New York, on January 19, 1994.
ROCHESTER TELEPHONE CORPORATION
By /s/ LOUIS L. MASSARO
------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
*
------------------------------------------- Chairman, President and Chief January 19, 1994
Ronald L. Bittner Executive Officer
Corporate Vice President-
/s/ LOUIS L. MASSARO Finance and Treasurer
------------------------------------------- (Principal Financial and January 19, 1994
Louis L. Massaro Accounting Officer)
*
------------------------------------------- Director January 19, 1994
Patricia C. Barron
*
------------------------------------------- Director January 19, 1994
John R. Block
*
------------------------------------------- Director January 19, 1994
Harlan D. Calkins
------------------------------------------- Director
Brenda E. Edgerton
*
------------------------------------------- Director January 19, 1994
Jairo A. Estrada
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S> <C>
*
------------------------------------------- Director January 19, 1994
Daniel E. Gill
*
------------------------------------------- Director January 19, 1994
Alan C. Hasselwander
------------------------------------------- Director
Wolcott J. Humphrey, Jr.
*
------------------------------------------- Director January 19, 1994
Douglas H. McCorkindale
------------------------------------------- Director
Richard P. Miller, Jr.
------------------------------------------- Director
G. Dennis O'Brien
------------------------------------------- Director
Leo J. Thomas, Ph.D.
------------------------------------------- Director January 19, 1994
Michael T. Tomaino
* By: /s/ LOUIS L. MASSARO
-------------------------------------------
Attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT 5.1
LETTERHEAD OF:
- -------------
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3909
JANUARY 19, 1994
VIA EDGAR TRANSMISSION
- --------------------------
ROCHESTER TELEPHONE CORPORATION
180 SOUTH CLINTON AVENUE
ROCHESTER, NY 14646
DEAR SIRS:
We have acted as special counsel to Rochester Telephone Corporation, a New
York corporation (the "Company"), in connection with the proposed sale of up to
5,750,000 shares of Common Stock, par value $1.00 per share, of the Company,
2,885,000 of such shares to be sold by a stockholder of the Company and up to
2,865,000 of such shares to be sold by the Company (collectively, the "Shares"),
as described in the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933. The Shares are to be purchased by
certain underwriters and offered for sale to the public pursuant to the terms of
an Underwriting Agreement, the form of which will be filed as an exhibit to the
Registration Statement.
We have examined, and have relied upon as to matters of fact, such
documents, corporate records and other instruments as we have deemed necessary
for the purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Shares to be sold
by such selling stockholder have been duly authorized by the Company and have
been validly issued and are fully paid and nonassessable and that, when (i)
appropriate definitive action has been taken by the Board of Directors, the
Executive Committee or the appropriate officers of the Company and (ii)
appropriate action has been taken by and before the New York State Public
Service Commission, the Shares to be sold by the Company will have been duly
authorized and, upon payment and delivery in accordance with the Underwriting
Agreement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Registration Statement.
Very truly yours,
s/Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on Form
S-3 of Rochester Telephone Corporation of our report, dated January 18, 1993,
which appears on page 29 of the 1992 Annual Report to Share Owners of Rochester
Telephone Corporation, which is incorporated by reference in Rochester Telephone
Corporation's Annual Report on Form 10-K for the year ended December 31, 1992.
We also consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 24 of such Annual Report on Form
10-K. We also consent to the incorporation by reference of our report dated
January 17, 1994 which appears on page 9 of the Current Report on Form 8-K dated
January 20, 1994. We also consent to the reference to us under the heading
"Experts" in such Prospectus. We also consent to the reference to us under the
heading "Summary Financial and Operating Data" in such Prospectus. However, it
should be noted that Price Waterhouse has not prepared or certified such
"Summary Financial and Operating Data."
s/Price Waterhouse
PRICE WATERHOUSE
January 19, 1994
Rochester, New York
