<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: January 20, 1994
PACTEL CORPORATION
A California Commission File I.R.S. Employer
Corporation No. 1-12342 No. 94-2995122
130 Kearny Street, San Francisco, California 94108
Telephone Number (415) 394-3000
<PAGE>
Form 8-K PacTel Corporation
January 20, 1994
Item 5. Other Events
--------------------
On January 20, 1994, PacTel Corporation issued the document set forth
in Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits
------------------------------------------
(c) Exhibit:
Exhibit
Number Description
------- -----------
99 PacTel Corporation's document issued and dated January 20,
1994 entitled PacTel Corp. Facts & Financials.
2
<PAGE>
Form 8-K PacTel Corporation
January 24, 1994
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACTEL CORPORATION
By /s/ L. L. Christensen
---------------------------
Executive Vice President and
Chief Financial Officer
January 24, 1994
3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99 PacTel Corporation's document issued and dated January 20,
1994 entitled PacTel Corp. Facts & Financials.
4
<PAGE>
Exhibit 99
-----------
PACTEL CORP. FACTS & FINANCIALS
January 20, 1994
Pacific Telesis Group, the parent of PacTel Corporation, today released 1993
financial results on a consolidated basis which included information for
PacTel Corporation. We felt that this information would be of interest to you,
as a member of the financial community who follows PacTel Corporation.
However, please note that the "net income from spin-off operations" reported
by Pacific Telesis Group on its attached income statement is presented solely
for the purposes of its financial results. Upon receipt of final results from
its domestic and international partnerships and joint ventures, PacTel
Corporation will release consolidated 1993 financial results which could
differ materially from that reported by Pacific Telesis Group today. PacTel
Corporation plans to release its 1993 consolidated financial statements in
March 1994.
PacTel Corporation reported having 1,046,000 proportionate customers on
domestic cellular systems for which it has or shares operational control, an
increase of 302,000 from a year ago. That represents a 40.6 percent increase
over the 744,000 reported in the fourth quarter of 1992.
Each of the company's domestic cellular markets added a record number of
customers for the quarter.
"We enjoyed explosive customer growth as customers continued to see the value
of our cellular service," said C. Lee Cox, president and chief operating
officer of PacTel Corporation. "Our plans to install digital technology in our
California and Atlanta networks will help ensure that customers receive
quality service and have access to important new wireless products."
PacTel Corporation's fourth quarter operating income from domestic cellular
totaled $51.3 million, a 37.5 percent increase over the $37.3 million of a
year ago. Revenues totaled $248.0 million, up 30 percent over the $191.3
million of a year ago. Cash flow margins were nearly 39 percent, with operat-
ing cash flows of $96 million, despite costs associated with customer growth.
Cash flow margins for the year 1993 were nearly 43%.
PacTel Paging also turned in an impressive fourth quarter, culminating its
strongest growth year ever. The number of units in service increased to 1.2
million, up 42 percent from the 821,000 of a year ago. This increase includes
22,000 units that were purchased through a fourth quarter acquisition.
Domestic paging operating cash flow for the year totaled $50.3 million,
increasing 18.4 percent over the previous year's 42.5 million despite costs
incurred for entering new markets.
Internationally, PacTel Corporation's German cellular joint venture, in which
the company is the second largest shareowner, neared 500,000 customers at
year-end, far above original expectations. The Mannesmann Mobilfunk cellular
network covers more than 90 percent of the population in Germany.
In Portugal, the company holds a 23 percent interest in the Telecel cellular
system, which reported nearly 40,000 customers at year end, up from only about
5,000 customers a year ago.
1
<PAGE>
In Belgium, PacTel Corporation successfully helped the state-owned telephone
company launch a new digital cellular network on Jan. 1. That system had 2,500
customers within the first few days of operation.
PacTel Corporation completed an initial public offering of 68.5 million shares
in 1993. Pacific Telesis Group has stated that subject to approval by the
Board of Directors, it plans to spin-off PacTel Corporation in the first half
of 1994.
2
<PAGE>
PACTEL CORPORATION APPENDIX
SUMMARY DOMESTIC CELLULAR OPERATING DATA
Page 1 of 4
Unaudited (Dollars in millions)
SELECTED PROPORTIONATE 4TH Q 4TH Q % 3RD Q %
DOMESTIC CELLULAR: (a) 1993 (b) 1992 CHANGE 1993 CHANGE
---------- --------- --------- --------- ---------
OPERATING REVENUES (c)
Cellular Service and
Other Revenues........ $251.4 $191.3 31.4 $227.3 10.6
Equipment Sales......... 13.5 8.0 68.8 10.2 32.4
Cost of Equipment
Sales................. (16.9) (8.0) 111.3 (9.5) 77.9
Net Operating Revenues.. $248.0 $191.3 29.6 $228.0 8.8
COSTS AND EXPENSES
Cost of Revenues........ 29.1 23.9 21.8 30.5 (4.6)
Selling, General,
and Administrative
Expenses.............. 122.9 96.3 27.6 91.7 34.0
Depreciation............ 40.0 30.2 32.5 37.5 6.7
Amortization of
Intangible Assets..... 4.7 3.6 30.6 4.8 (2.1)
---------- ---------
---------
TOTAL COSTS AND
EXPENSES.............. $196.7 $154.0 27.7 $164.5 19.6
---------- --------- ---------
Operating Income $51.3 $37.3 37.5 $63.5 (19.2)
OPERATIONAL COMPARISONS
Proportionate Cellular
Subscribers
(thousands).......... 1,046 744 40.6 934 12.0
Company POPs in
Controlled Markets
(millions)........... 33.6 32.3 4.0 33.6 0.0
Operating Cash Flow
($ millions) (d)..... $96.0 $71.1 35.0 $105.8 (9.3)
Operating Cash Flow
Margin (%)........... 38.7 37.2 - 46.4 -
Capital Expenditures
Excluding Investment
Activity ($ millions) $69.2 $72.1 (4.0) $40.2 72.1
NOTES:
(a) The financial and subscriber information presented above reflects PacTel
Corporation's proportionate domestic cellular interests in its subsidiaries,
partnerships and joint ventures, except for certain minority cellular
investments which in total represented approximately five percent of PacTel
Corporation's proportionate domestic cellular operating income in 1993. This
proportionate presentation improves the period-to-period comparability of this
information but is not in conformity with generally accepted accounting
principles.
(Continued next page)
3
<PAGE>
(APPENDIX, Page 1 continued)
(b) These presentations have been prepared solely for inclusion by Pacific
Telesis Group in its report of 1993 earnings and should not be viewed as a
report on the results of PacTel Corporation itself. PacTel Corporation expects
to release its 1993 consolidated results in March 1994 following the receipt
of final results from its domestic joint ventures and partnerships.
(c) Prior periods have been revised to agree with 1993 presentation format.
Equipment sales and costs of equipment sales are now both presented in the
revenue section of the income statements.
(d) Operating Cash Flow: Operating Income plus Depreciation and Amortization
of Intangible Assets.
4
<PAGE>
PACTEL CORPORATION - APPENDIX
SUMMARY DOMESTIC CELLULAR AND PAGING OPERATING DATA
Page 2 of 4
Unaudited (Dollars in millions)
SELECTED PROPORTIONATE YEAR YEAR %
DOMESTIC CELLULAR: (a) 1993 (b) 1992 CHANGE CHANGE
--------- --------- --------- ---------
OPERATING REVENUES (c)
Cellular Service and Other
Revenues.......................... $892.0 $699.4 $192.6 27.5
Equipment Sales..................... 40.2 24.8 15.4 62.1
Cost of Equipment Sales............. (42.2) (23.9) (18.3) 76.6
Net Operating Revenues.............. $890.0 $700.3 $189.7 27.1
COSTS AND EXPENSES
Cost of Revenues.................... 116.3 98.7 17.6 17.8
Selling, General, and
Administrative Expenses........... 394.1 322.5 71.6 22.2
Depreciation........................ 147.0 109.0 38.0 34.9
Amortization of Intangible
Assets............................ 17.7 15.1 2.6 17.2
--------- --------- --------- ---------
TOTAL COSTS AND EXPENSES $675.1 $545.3 $129.8 23.8
--------- --------- --------- ---------
Operating Income.................... $214.9 $155.0 $59.9 38.6
OPERATIONAL COMPARISONS
Proportionate Cellular Subscribers
(thousands)....................... 1,046 744 302 40.6
Company POPs in Controlled
Markets (millions)................ 33.6 32.3 1.3 4.0
Operating Cash Flow
($ millions) (d).................. $379.6 $279.1 $100.5 36.0
Operating Cash Flow Margin (%)...... 42.7 39.9 - -
Capital Expenditures Excluding
Investment Activity
($ millions)...................... $198.4 $199.8 ($1.4) (0.7)
SELECTED DOMESTIC PAGING: (c)
Paging Service and Other
Revenues.......................... $145.7 $113.5 $32.2 28.4
Equipment Sales..................... 35.2 22.2 13.0 58.6
Cost of Equipment Sales............. (31.9) (19.2) (12.7) 66.1
Net Operating Revenues.............. $149.0 $116.5 $32.5 27.9
Total Operating Expenses............ $129.3 $100.3 $29.0 28.9
Operating Income.................... $19.7 $16.2 $3.5 21.6
Operating Cash Flow
($ millions) (d).................. $50.3 $42.5 $7.8 18.4
Domestic Units in Service
(thousands)....................... 1,167 821 346 42.1
(Continued next page)
5
<PAGE>
(APPENDIX, Page 2 continued)
NOTES:
(a) The financial and subscriber information presented above reflects PacTel
Corporation's proportionate domestic cellular interests in its subsidiaries,
partnerships and joint ventures, except for certain minority cellular
investments which in total represented approximately five percent of PacTel
Corporation's proportionate domestic cellular operating income in 1993. This
proportionate presentation improves the period-to-period comparability of this
information but is not in conformity with generally accepted accounting
principles.
(b) These presentations have been prepared solely for inclusion by Pacific
Telesis Group in its report of 1993 earnings and should not be viewed as a
report on the results of PacTel Corporation itself. PacTel Corporation expects
to release its 1993 consolidated results in March 1994 following the receipt
of final results from its domestic joint ventures and partnerships.
(c) Prior periods have been revised to agree with 1993 presentation format.
Equipment sales and costs of equipment sales are now both presented in the
revenue section of the income statements.
(d) Operating Cash Flow: Operating Income plus Depreciation and Amortization
of Intangible Assets.
6
<PAGE>
PACIFIC TELESIS GROUP AND SUBSIDIARIES APPENDIX
FINANCIAL PERFORMANCE
Page 3 of 4
(Unaudited)
(Dollars in millions lST Q 2ND Q 3RD Q 4TH Q YEAR
except per share amounts) 1993 1993 1993 1993 1993
------------------------- --------- --------- --------- --------- ---------
OPERATING REVENUES:
Local Service............. $856 $874 $880 $867 $3,477
Network Access-Interstate. 402 406 416 398 1,622
Network Access-Intrastate. 168 165 174 176 683
Toll Service.............. 516 517 520 505 2,058
Other Service Revenues.... 344 355 354 351 1,404
--------- --------- --------- --------- ---------
TOTAL OPERATING REVENUES.. 2,286 2,317 2,344 2,297 9,244
Cost of Products and
Services................ 509 475 475 473 1,932
Customer Operations and
Selling Expenses........ 417 447 453 471 1,788
Property and Miscellaneous
Taxes................... 49 47 46 46 188
Provision for
Uncollectibles.......... 40 36 45 41 162
General, Administrative,
and Other Expenses...... 298 326 324 397 1,345
Restructuring Charges..... 413 - - 1,018 1,431
--------- --------- --------- --------- ---------
1,726 1,331 1,343 2,446 6,846
--------- --------- --------- --------- ---------
Operating Income Before
Depreciation/
Amortization............ 560 986 1,001 (149) 2,398
Depreciation and
Amortization............ 435 437 430 434 1,736
--------- --------- --------- --------- ---------
OPERATING INCOME.......... 125 549 571 (583) 662
Interest Expense.......... 125 122 114 148 509
Miscellancous Income...... 9 23 11 5 48
--------- --------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES............ 9 450 468 (726) 201
Income Taxes.............. 3 167 161 (321) 10
--------- --------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS.............. 6 283 307 (405) 191
Income (Loss) From
Spin-off Operations,
Net of Tax ............. (9) 8 16 14 29
Income Before Cumulative
Effect of Accounting
Changes................. (3) 291 323 (391) 220
(Continued next page)
7
<PAGE>
(APPENDIX, Page 3 continued)
lST Q 2ND Q 3RD Q 4TH Q YEAR
1993 1993 1993 1993 1993
--------- --------- --------- --------- ---------
Cumulative Effect of
Accounting Changes...... (1,724) 0 - - (1,724)
---------- --------- --------- --------- ---------
Net Income (Loss)......... ($l,727) $291 $323 ($391) ($1,504)
========= ========= ========= ========= =========
Earnings (Loss) Per Share:
Income From Continuing
Operations.............. $0.01 $0.69 $0.73 ($0.96) $0.46
Income (Loss) From
Spin-off Operations..... ($0.02) $0.02 $0.04 $0.04 $0.07
Income Before Cumulative
Effect of Accounting
Changes................. ($0.01) $0.71 $0.77 ($0.92) $0.53
Cumulative Effect of
Accounting Changes...... ($4.24) - - - ($4.16)
Net Income (Loss)......... ($4.25) $0.71 $0.77 ($0.92) ($3.63)
Dividends Per Share....... $0.545 $0.545 $0.545 $0.545 $2.18
Average Shares
Outstanding (000s)...... 406,660 410,567 417,215 422,241 414,171
EOP Shares Outstanding
(000s).................. 408,314 413,460 421,400 423,059 423,059
EOP Total Employee
Force................... 56,535 56,318 55,938 55,355 55,355
Capital Expenditures...... $382 $474 $442 $588 $1,886
See accompanying Notes to Consolidated Financial Statements
8
<PAGE>
NOTES TO PACIFIC TELESIS GROUP AND SUBSlDIARIES APPENDIX
CONSOLIDATED FINANCIAL STATEMENTS
Page 4 of 4
Planned Spin-off
In December 1992, the Corporation announced that its Board of Directors (the
"Board") had approved a plan, subject to certain conditions, to spin off the
domestic and international wireless operations of PacTel Corporation
("PacTel"). These operations principally include the Corporation's cellular,
paging and radiolocation services. The Corporation will continue to own its
telephone subsidiaries, Pacific Bell and Nevada Bell, along with several
smaller units. The Corporation's financial statements have been reclassified
to reflect the operating results and net assets of PacTel as "spin-off
operations" separately from the Corporation's "continuing operations." The
spin-off, which is subject to final Board approval, is currently expected to
occur within the first half of 1994.
Financial information presented for PacTel Corporation in the Pacific Telesis
Group consolidated financial statements has been prepared solely for the
purpose of reporting Pacific Telesis Group results and should not be viewed as
a report on the results of PacTel Corporation itself. PacTel Corporation
expects to release its 1993 consolidated results in March 1994 following the
receipt of final results from its domestic and international joint ventures
and partnerships. These 1993 PacTel Corporation consolidated results may
differ materially from those reported in Pacific Telesis Group consolidated
results.
Accounting Changes
Effective January 1, 1993, the Corporation adopted new accounting rules for
postretirement benefits other than pensions and for postemployment benefits
and recorded first quarter after-tax charges applicable to continuing
operations of $1.573 billion and $151 million, respectively. These charges
represent the cumulative effects of applying the new rules to prior years and
reduced earnings for 1993 by $3.80 per share and $.36 per share, respectively.
The new rules require a change from the cash method to the accrual method of
accounting for these costs.
Restructuring Charges
During first quarter 1993, the Corporation completed a reevaluation of
investment alternatives relating to its 1990 decision to dispose of the real
estate portfolio of its real estate subsidiary. Based on its decision to
dispose of these assets over the next three to five years, the Corporation
recorded an additional pre-tax restructuring reserve of $347 million to cover
potential future losses on sales and estimated operating losses. An additional
$66 million first quarter pre-tax charge was recorded relating to the
withdrawal from, or restructuring of, the Corporation's cable and customer
premises equipment businesses as well as some anticipated costs related to the
planned spin-off of PacTel. Overall, these charges reduced earnings for first
quarter 1993 by $258 million, or $.63 per share.
During fourth quarter 1993, the Corporation recorded pre-tax restructuring
charges totaling $1.018 billion. These charges include a $977 million charge
by Pacific Bell to recognize the cost of force reductions associated with
reengineering its internal business processes through 1997. This charge will
(Continued next page)
9
<PAGE>
(APPENDIX, Page 4 continued)
cover the incremental costs associated with separation and relocation of
employees. It will also cover the incremental costs of consolidating and
streamlining operations and facilities to support these downsizing
initiatives. The remaining $41 million fourth quarter charge is primarily for
additional anticipated costs related to the planned spin-off of PacTel.
Overall, these charges reduced earnings for fourth quarter 1993 by $603
million, or $1.43 per share.
10
