Item 1. Business
GTE Southwest Incorporated (the Company), was incorporated in Delaware in 1926. The Company is a wholly-owned subsidiary of GTE Corporation (GTE) and provides communications services in the states of Arkansas, New Mexico, Oklahoma and Texas.
The Company provides local telephone service within its franchise areas and intraLATA (Local Access Transport Area) long distance service between the Company's facilities and the facilities of other telephone companies within the Company's LATAs. InterLATA service to other points in and out of the states in which the Company operates is provided through connection with interexchange (long distance) common carriers. These common carriers are charged fees (access charges) for interconnection to the Company's local facilities. End user business and residential customers are also charged access charges for access to the facilities of the long distance carriers. The Company also earns other revenues by leasing interexchange plant facilities and providing such services as billing and collection and operator services to interexchange carriers, primarily the American Telephone and Telegraph Company (AT&T). The number of access lines served has grown steadily from 1,310,342 on January 1, 1989 to 1,641,324 on December 31, 1993.
The following table denotes the access lines in the states in which the Company operates as of December 31, 1993: Access State Lines Served ----- ------------
Texas 1,403,529 Oklahoma 117,668 Arkansas 78,092 New Mexico 42,035 ---------
Total 1,641,324 _________
The Company's principal line of business is providing telecommunication services. These services fall into six major classes including the Texas rate case reserve: local network, network access, long distance, the Texas rate case reserve, equipment sales and services and other. Revenues from each of these classes over the last three years are as follows:
Years Ended December 31 -------------------------------------- 1993 1992 1991 ---- ---- ---- (Thousands of Dollars)
Local Network Services $ 421,004 $ 391,601 $ 363,292 % of Total Revenues 36% 33% 32%
Network Access Services $ 438,046 $ 482,636 $ 475,860 % of Total Revenues 38% 41% 42%
Long Distance Services $ 189,954 $ 204,708 $ 207,824 % of Total Revenues 16% 17% 18%
Equipment Sales and Services $ 72,394 $ 67,125 $ 69,593 % of Total Revenues 6% 6% 6%
Texas Rate Case Reserve $ (16,308) $ (25,498) $ (37,000) % of Total Revenues (1)% (2)% (3)%
Other $ 57,275 $ 61,213 $ 54,459 % of Total Revenues 5% 5% 5%
At December 31, 1993, the Company had 7,184 employees. The Company has written agreements with the Communications Workers of America (CWA) covering approximately 5,156 of the Company's employees. The current agreements with CWA units expire in August 1995.
Telephone Competition
The Company holds franchises, licenses and permits adequate for the conduct of its business in the territories which it serves.
The Company is subject to regulation by the regulatory bodies of the states of Arkansas, New Mexico, Oklahoma and Texas as to its intrastate business operations and by the Federal Communications Commission (FCC) as to its interstate business operations. Information regarding the Company's activities with the various regulatory agencies and revenue arrangements with other telephone companies can be found in Note 10 of the Company's Annual Report to Shareholders for the year ended December 31, 1993, incorporated herein and filed as Exhibit 13.
The year was marked by important changes in the U.S. telecommunications industry. Rapid advances in technology, together with government and industry initiatives to eliminate certain legal and regulatory barriers are accelerating and expanding the level of competition and opportunities available to the Company. As a result, the Company faces increasing competition in virtually all aspects of its business. Specialized communications companies have constructed new systems in certain markets to bypass the local exchange network. Additional competition from interexchange carriers as well as wireless companies continues to evolve for both intrastate and interstate communications.
During 1994, the Company will begin implementation of a re-engineering plan that will redesign and streamline processes. Implementation of its re-engineering plan will allow the Company to continue to respond aggressively to these competitive and regulatory developments through reduced costs, improved service quality, competitive prices and new product offerings. Moreover, implementation of this program will position the Company to accelerate delivery of a full array of voice, video and data services. The re-engineering program will be implemented over three years. During the year, the company continued to introduce new business and consumer services utilizing advanced technology, offering new features and pricing options while at the same time reducing costs and prices.
During 1993, the FCC announced its decision to auction licenses during 1994 in 51 major markets and 492 basic trading areas across the United States to encourage the development of a new generation of wireless personal communications services (PCS). These services will both complement and compete with the Company's traditional wireline services. The Company will be permitted to fully participate in the license auctions in areas outside of GTE's existing cellular service areas. Limited participation will be permitted in areas in which GTE has an existing cellular presence.
In 1992, the FCC issued a "video dialtone" ruling that allows telephone companies to transmit video signals over their networks. The FCC also recommended that Congress amend the Cable Act of 1984 to permit telephone companies to supply video programming in their service areas.
Activity directed toward changing the traditional cost-based rate of return regulatory framework for intrastate and interstate telephone services has continued. Various forms of alternative regulation have been adopted, which provide economic incentives to telephone service providers to improve productivity and provide the foundation for the pricing flexibility necessary to address competitive entry into the markets the Company serves.
In September 1993, the FCC released an order allowing competing carriers to interconnect to the local-exchange network for the purpose of providing switched access transport services. This ruling complements similar interconnect arrangements for private line services ordered during 1992. The order encourages competition for the transport of telecommunications traffic between local exchange carriers' (LECs) switching offices and interexchange carrier locations. In addition, the order allows LECs flexibility in pricing competitive services.
The GTE Consent Decree, which was issued in connection with the 1983 acquisition of GTE Sprint (since divested) and GTE Spacenet, prohibits GTE's domestic telephone operating subsidiaries from providing long distance service beyond the boundaries of the LATA. This prohibition restricts their direct provision of long distance service to relatively short distances. The degree of competition allowed in the intraLATA market is subject to state regulation. However, regulatory constraints on intraLATA competition are gradually being relaxed. In fact, some form of intraLATA competition is authorized in many of the states in which the Company provides service.
These and other actions to eliminate the existing legal and regulatory barriers, together with rapid advances in technology, are facilitating a convergence of the computer, media and telecommunications industries. In addition to allowing new forms of competition, these developments are also creating new opportunities to develop interactive communications networks. The Company supports these initiatives to assure greater competition in telecommunications, provided that overall the changes allow an opportunity for all service providers to participate equally in a competitive marketplace under comparable conditions.
Item 2.
Item 2. Properties
The Company's property consists of network facilities (77%), company facilities (15%), customer premises equipment (6%) and other (2%). From January 1, 1989 to December 31, 1993, the Company made gross property additions of $1.3 billion and property retirements of $0.7 billion. Substantially all of the Company's property is subject to liens securing long-term debt. In the opinion of management, the Company's telephone plant is substantially in good repair.
Item 3.
Item 3. Legal Proceedings
This item is herein incorporated by reference to Note 10 of the Company's Annual Report to Shareholders for the year ended December 31, 1993, filed as Exhibit 13.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters
Market information is omitted since the Company's common stock is wholly-owned by GTE Corporation.
Item 6.
Item 6. Selected Financial Data
Reference is made to the Registrant's Annual Report to Shareholders, page 28, for the year ended December 31, 1993, incorporated herein and filed as Exhibit 13.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Reference is made to the Registrant's Annual Report to Shareholders, pages 24 to 27, for the year ended December 31, 1993, incorporated herein and filed as Exhibit 13.
Item 8.
Item 8. Financial Statements and Supplementary Data
Reference is made to the Registrant's Annual Report to Shareholders, pages 5 to 22, for the year ended December 31, 1993, incorporated herein and filed as Exhibit 13.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The names, ages and positions of all the directors and executive officers of the Company as of March 1, 1994 are listed below along with their business experience during the past five years.
a. Identification of Directors
Director Name Age Since Business Experience ---- --- -------- ---------------------
John C. Appel 45 1993 State President-Texas, GTE Southwest Incorporated; former Regional Vice President-General Manager, GTE West Area; former Assistant Vice President-Business Services, GTE Telephone Operations.
Kent B. Foster 50 1994 Vice Chairman of the Board of Directors of GTE Corporation, October 1993. President, GTE Telephone Operations, 1989; Director, GTE Corporation, 1992; Director, all GTE domestic telephone subsidiaries, 1993; Director, BC Telecom, Inc.; Director, Compania Anonima Nacional Telefonos de Venezuela; Director, National Bank of Texas.
Richard M. Cahill 55 1994 Vice President - General Counsel of GTE Telephone Operations, 1988; Director, all GTE domestic telephone subsidiaries, 1993; Director, GTE Vantage Incorporated, 1991; Director, GTE Intelligent Network Services Incorporated, 1993.
Gerald K. Dinsmore 44 1994 Senior Vice President - Finance and Planning for GTE Telephone Operations, 1994. Vice President - Finance, GTE Telephone Operations, 1993; Vice President - Intermediary Customer Markets, GTE Telephone Operations, 1991. President, South Area, GTE Telephone Operations, 1992; Director, all GTE domestic telephone subsidiaries, 1993.
Michael B. Esstman 47 1991 Executive Vice President-Operations, GTE Telephone Operations, 1993; President, Central Area, GTE Telephone Operations, 1991. President, Contel Eastern Region, Telephone Operations Sector, 1983; Director, AG Communications System; Director, all GTE domestic telephone subsidiaries, 1993.
Thomas W. White 47 1994 Executive Vice President of GTE Telephone Operations, 1993; Senior Vice President - General Office Staff, GTE Telephone Operations, 1989; Director, all GTE domestic telephone subsidiaries, 1993; Director, Quebec-Telephone.
Directors are elected annually. The term of each director expires on the date of the next annual meeting of shareholders, which may be held on any day during March, as specified in the notice of the meeting.
There are no family relationships between any of the directors or executive officers of the Company.
All of the directors, with the exception of Mr. Esstman, were appointed to the board effective January 1, 1994 upon the resignation of Richard E. Bell, Joe I. Cardenas, Ingram Hartje, III, Larry C. Squires, D.V.M., Kenneth F. Teasdale and Dr. Frank Vandiver.
b. Identification of Executive Officers
Year Assumed Current Name Age Position Position with Company (1) ------------------ ---- -------- ------------------------- John C. Appel (2) 45 1993 President J. Bruce Cole 52 1987 State Vice President - Sales Oscar C. Gomez 47 1987 State Vice President - External Affairs Gregory D. Jacobson 42 1992 State Vice President - Finance Michael T. Metcalf (3) 47 1993 State Vice President - Human Resources William G. Mundy 44 1985 State Vice President - General Counsel Dennis F. Myers (4) 49 1993 State Vice President - Operations Barry W. Paulson (5) 42 1993 State Vice President - General Manager - Oklahoma/Arkansas Charles J. Somes (6) 48 1994 Secretary
Year Assumed Current Position With Name Age Positiom GTE Telephone Operations (7) -------------------- --- --------- ---------------------------- Kent B. Foster 50 1989 President Michael B. Esstman (8) 47 1993 Executive Vice President - Operations Thomas W. White 47 1989 Executive Vice President Guillermo Amore 55 1990 Senior Vice President - International Gerald K. Dinsmore (9) 44 1993 Senior Vice President - Finance and Planning Robert C. Calafell (10) 52 1993 Vice President - Video Services A. T. Jones 54 1992 Vice President - International Brad M. Krall (11) 52 1993 Vice President - Centralized Services Don A. Hayes 56 1992 Vice President - Information Technology Richard L. Schaulin 51 1989 Vice President - Human Resources Clarence F. Bercher 50 1991 Vice President - Sales Mark S. Feighner 45 1991 Vice President - Product Management Geoff C. Gould 41 1989 Vice President - Regulatory and Governmental Affairs G. Bruce Redditt 43 1991 Vice President - Public Affairs Richard M. Cahill 55 1989 Vice President and General Counsel Leland W. Schmidt 60 1989 Vice President - Industry Affairs Paul E. Miner 49 1990 Vice President - Regional Operations Support Katherine J. Harless 43 1992 Vice President- Intermediary Markets William M. Edwards, III(12) 45 1993 Controller
Each of these executive officers has been an employee of the Company or an affiliated company for the last five years.
Except for duly elected officers and directors, no other employees had a significant role in decision making.
All officers are appointed for a term of one year.
NOTES:
(1) Titles were changed from Area/Regional Vice President to State Vice President in 1993; however, the functions did not change.
(2) John C. Appel was appointed President effective October 22, 1993 replacing Michael B. Esstman who was appointed Executive Vice President - Operations for GTE Telephone Operations.
(3) Michael T. Metcalf was appointed State Vice President - Human Resources effective December 5, 1993 replacing Nicholas J. Doria who resigned.
(4) Dennis F. Myers' title changed in 1993 from Regional Vice President - General Manager/Southwest to State Vice President - Operations.
(5) Barry W. Paulson's title changed in 1993 from Regional Vice President - General Manager/Midwest to State Vice President - General Manager - Oklahoma/Arkansas.
(6) Charles J.Somes was appointed Secretary replacing Jerry L. Austin who retired.
(7) Position is with, and duties are performed at, the GTE Telephone Operations Headquarters in Irving, Texas.
(8) Michael B. Esstman was appointed Executive Vice President - Operations effective April 25, 1993 replacing Charles A. Crain who retired on April 1, 1993.
(9) Gerald K. Dinsmore was appointed Senior Vice President - Finance and Planning effective November 21, 1993, replacing John L. Hume who retired.
(10) Robert C. Calafell was appointed Vice President - Video Services effective March 28, 1993.
(11) Brad M. Krall was appointed Vice President - Centralized Services effective November 7, 1993.
(12) William M. Edwards, III was appointed Controller effective November 7, 1993 replacing John D. Utzinger.
William E. Starkey retired November 21, 1993, George N. King retired May 21, 1993, Clark W. Barlow retired August 21, 1993, James A. Spriggs retired November 18, 1993, Rex A. Timms retired November 18, 1993.
William D. Wilson resigned effective November 1, 1993 to accept a new position in GTE South Incorporated and GTE North Incorporated as Area Vice President - General Manager - East.
The Federal securities laws require the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of any equity securities of the Company.
To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company, all persons subject to these reporting requirements filed the required reports on a timely basis except Gerald K. Dinsmore, who filed one initial statement of beneficial ownership of securities late. Mr. Dinsmore does not own, and has never owned, any shares of the Company's registered preferred stock (which is the only registered class of the Company's equity securities).
Long-Term Incentive Plan - Awards in Last Fiscal Year
The GTE Long-Term Incentive Plan (LTIP) provides for awards, currently in the form of stock options with tandem stock appreciation rights and cash bonuses, to participating employees. The stock options and stock appreciation rights awarded under the LTIP to the seven most highly compensated individuals in 1993 are shown in the table on page 10.
Under the LTIP, performance bonuses are paid in cash based on the achievement of pre-established goals for GTE's return on equity (ROE) over a three-year award cycle. Performance bonuses are denominated in units of GTE Common Stock ("Common Stock Units") and are maintained in a Common Stock Unit Account.
Executive Agreements
GTE has entered into agreements (the Agreements) with Messrs. Appel, Esstman, Krall and Foster regarding benefits to be paid in the event of a change in control of GTE (a "Change in Control").
A Change in Control is deemed to have occurred if a majority of the members of the Board do not consist of members of the incumbent Board (as defined in the Agreements) or if, in any 12-month period, three or more directors are elected without the approval of the incumbent Board. An individual whose initial assumption of office occurred pursuant to an agreement to avoid or settle a proxy or other election contest is not considered a member of the incumbent Board. In addition, a director who is elected pursuant to such a settlement agreement will not be deemed a director who is elected or nominated by the incumbent Board for purposes of determining whether a Change in Control has occurred. A Change in Control will not occur in the following situations: (1) certain merger transactions in which there is at least 50% GTE shareholder continuity in the surviving corporation, at least a majority of the members of the board of directors of the surviving corporation consists of members of the Board of GTE and no person owns more than 20% (or under certain circumstances, a lower percentage, not less than 10%) of the voting power of the surviving corporation following the transaction, and (2) transactions in which GTE's securities are acquired directly from GTE.
The Agreements provide for benefits to be paid in the event this individual separates from service and has a "good reason" for leaving or is terminated without "cause" within two years after a Change in Control of GTE.
Good reason for leaving includes but is not limited to the following events: demotion, relocation or a reduction in total compensation or benefits, or the new entity's failure to expressly assume obligations under the Agreements. Termination for cause includes certain unlawful acts on the part of the executive or a material violation of his or her responsibilities to the Corporation resulting in material injury to the Corporation.
An executive who experiences a qualifying separation from service will be entitled to receive up to two times the sum of (i) base salary and (ii) the average of his or her other percentage awards under the EIP for the previous three years. The executive will also continue to receive medical and life insurance coverage for up to two years and will be provided with financial and outplacement counseling.
In addition, the Agreements with Messrs. Appel, Esstman, Krall and Foster provide that in the event of a separation from service, they will receive service credit in the following amounts: two times years of service otherwise credited if the executive has five or fewer years of credited service; 10 years if credited service is more than five and not more than 10 years; and, if the executive's credited service exceeds 10 years, the actual number of credited years of service. These additional years of service will apply towards vesting, retirement eligibility, benefit accrual and all other purposes under the Supplemental Executive Retirement Plan and the Executive Retired Life Insurance Plan. In addition, each executive will be considered to have not less than 76 points and 15 years of accredited service for the purpose of determining his or her eligibility for early retirement benefits. However, there will be no duplication of benefits.
The Agreements remain in effect until the earlier of July 1 of each successive year or the date on which the executive reaches age 65, unless the Agreement is terminated earlier pursuant to its terms. The Agreements will be automatically renewed on each successive July 1 unless, not later than December 31 of the preceding year, one of the parties notifies the other that he does not wish to extend the Agreement. If a Change in Control occurs, the Agreements will remain in effect until the obligations of GTE (or its successor) under the Agreements have been satisfied.
Retirement Programs
Pension Plans
The estimated annual benefits payable, calculated on a single life annuity basis, under GTE's defined benefit pension plans at normal retirement at age 65, based upon final average earnings and years of employment, are illustrated in the table below:
PENSION PLAN TABLE
Years of Service Final Average _____________________________________________________________ Earnings 15 20 25 30 35 _____________ _________ __________ __________ __________ ________
$ 150,000 $ 31,604 $ 42,138 $ 52,672 $ 63,207 $ 73,742 200,000 42,479 56,638 70,797 84,957 99,117 300,000 64,229 85,638 107,048 128,457 149,867 400,000 85,979 114,638 143,298 171,957 200,617 500,000 107,729 143,638 179,548 215,457 251,367 600,000 129,479 172,638 215,798 258,957 302,117 700,000 151,229 201,638 252,048 302,457 352,867 800,000 172,979 230,638 288,298 345,957 403,617 900,000 194,729 259,638 324,548 389,457 454,367 1,000,000 216,479 288,638 360,798 432,957 505,117 1,200,000 259,979 346,638 433,298 519,957 606,617
GTE Service Corporation, a wholly-owned subsidiary of GTE, maintains a noncontributory pension plan for the benefit of GTE employees based on years of service. Pension benefits to be paid from this plan and contributions to this plan are related to basic salary exclusive of overtime, differentials, incentive compensation (except as otherwise described) and other similar types of payment. Under this plan, pensions are computed on a two-rate formula basis of 1.15% and 1.45% for each year of service, with the 1.15% service credit being applied to that portion of the average annual salary for the five highest consecutive years that does not exceed the Social Security Integration Level (the portion of salary subject to the Federal Security Act), and the 1.45% service credit being applied to that portion of the average annual salary that exceeds said level. As of March 1, 1993, the credited years of service under the plan for Messrs. Appel, Myers, Spriggs, Esstman, Krall, Cole and Foster are 22, 32, 37, 25, 27, 29 and 23, respectively.
Under Federal law, an employee's benefits under a qualified pension plan such as the GTE Service Corporation plan are limited to certain maximum amounts. GTE maintains a Supplemental Executive Retirement Plan (SERP), which supplements the benefits of any participant in the qualified pension plan by direct payment of a lump sum or by an annuity, on an unfunded basis, of the amount by which any participant's benefits under the GTE Service Corporation pension plan are limited by law. In addition, the SERP includes a provision permitting the payment of additional retirement benefits determined in a similar manner as under the qualified pension plan on remuneration accrued under management incentive plans as determined by the Executive Compensation and Organizational Structure Committee.
Executive Retired Life Insurance Plan
The Executive Retired Life Insurance Plan (ERLIP) provides Messrs. Appel, Myers, Spriggs, Esstman, Krall, Cole and Foster a maximum postretirement life insurance benefit of three times final base salary. Upon retirement, ERLIP benefits may be paid as life insurance or optionally, an equivalent amount may be paid as a lump sum payment equal to the present value of the life insurance amount (based on actuarial factors and the interest rate then in effect), as an annuity or as installment payments. If an optional payment method is selected, the ERLIP benefit will be based on the actuarial equivalent of the present value of the insurance amount.
Directors' Compensation
The current directors, all of whom are employees of GTE, are not paid any fees of renumeration, as such, for service on the Board.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners as of February 28, 1994:
Name and Shares of Title Address of Beneficial Percent of Class Beneficial Owner Ownership of Class ________ ________________ _________ ________
Common Stock of GTE Corporation 6,450,000 100% GTE Southwest One Stamford Forum shares of Incorporated Stamford, Connecticut record
(b) Security Ownership of Management as of December 31, 1993:
Name of Director or Nominee ___________________________
Common Stock of GTE Corporation John C. Appel 5,453 All less Kent B. Foster 168,299 than 1% Richard M. Cahill 37,188 Gerald K. Dinsmore 18,503 Michael B. Esstman 54,051 Thomas W. White 83,071 _______ 366,565 =======
Executive Officers(1)(2) _________________________
John C. Appel 5,453 Dennis F. Myers 14,631 James A. Spriggs 10,574 Michael B. Esstman 54,051 Brad M. Krall 13,311 J. Bruce Cole 12,153 Kent B. Foster 168,299 _______ 278,472 =======
All directors and executive officers as a group(1)(2) 762,690 =======
(1) Includes shares acquired through participation in GTE's Consolidated Employee Stock Ownership Plan and/or the GTE Savings Plan.
(2) Included in the number of shares beneficially owned by Messrs. Appel, Myers, Spriggs, Esstman, Krall, Cole and Foster and all directors and executive officers as a group are 2,333; 8,631; 7,300; 33,118; 8,832; 11,532; 115,583 and 516,250 shares, respectively, which such persons have the right to acquire within 60 days pursuant to stock options.
(c) There were no changes in control of the Company during 1993.
Item 13.
Item 13. Certain Relationships and Related Transactions
The Company's executive officers or directors were not materially indebted to the Company or involved in any material transaction in which they had a direct or indirect material interest. None of the Company's directors were involved in any business relationships with the Company.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements - Reference is made to the Registrant's Annual Report to Shareholders, pages 5 - 22 for the year ended December 31, 1993, incorporated herein and filed as Exhibit 13.
Report of Independent Public Accountants.
Balance Sheets - December 31, 1993 and 1992.
Statements of Income for the years ended December 31, 1993-1991.
Statements of Reinvested Earnings for the years ended December 31, 1993-1991.
Statements of Cash Flows for the years ended December 31, 1993-1991.
Notes to Financial Statements.
(2) Financial Statement Schedules - Included in Part IV of this report for the years ended December 31, 1993-1991:
Page(s) ------- Report of Independent Public Accountants 21
Schedules:
V - Property, Plant and Equipment 22-24
VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment 25
VIII - Valuation and Qualifying Accounts 26
X - Supplementary Income Statement Information 27
Note: Schedules other than those listed above are omitted as not applicable, not required, or the information is included in the financial statements or notes thereto.
(3) Exhibits - Included in this report or incorporated by reference.
3 Articles of Incorporation and amended By-Laws (Exhibit 3 of the 1993 Form 10-K, File No. 1-7077).
4* Thirty-Seventh Supplemental Indenture (Exhibit 4 of the Form 10-K File No. 1-7077). Thirty-Eighth Supplemental Indenture, File No. 33-43549.
13 Annual Report to Shareholders for the year ended December 31, 1993, filed herein as Exhibit 13.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the fourth quarter of 1993.
* Denotes exhibits incorporated herein by reference to previous filings with the Securities and Exchange Commission as designated.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To GTE Southwest Incorporated:
We have audited in accordance with generally accepted auditing standards, the financial statements included in GTE Southwest Incorporated's annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 28, 1994. Our report on the financial statements includes an explanatory paragraph with respect to the change in the method of accounting for income taxes in 1992 as discussed in Note 1 to the financial statements. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed under Item 14 are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas January 28, 1994.
GTE SOUTHWEST INCORPORATED
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991 (Thousands of Dollars)
- - ----------------------------------------------------------------------------- Column A Column B --------- -------------------------------------------- Item Charged to Operating Expenses - - -----------------------------------------------------------------------------
1993 1992 1991 ----------- ---------- -----------
Maintenance and repairs $ 207,048 $ 186,486 $ 191,939
Taxes, other than payroll and income taxes, are as follows:
Real and personal property $ 38,343 $ 33,820 $ 36,643 Other 7,149 15,339 2,109 Portion of above taxes charged to plant and other accounts (4,539) (4,764) (3,368) __________ __________ __________
Total $ 40,953 $ 44,395 $ 35,384 ========== ========== ==========
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GTE SOUTHWEST INCORPORATED __________________________ (Registrant)
Date March 21, 1994 By JOHN C. APPEL ________________________ JOHN C. APPEL President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report is signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
JOHN C. APPEL - - ------------------------ President and Director March 21, 1994 JOHN C. APPEL (Principal Executive Officer)
GERALD K. DINSMORE - - ------------------------ Senior Vice President - Finance March 21, 1994 GERALD K. DINSMORE and Planning and Director (Principal Financial Officer)
WILLIAM M. EDWARDS, III - - ------------------------ Controller March 21, 1994 WILLIAM M. EDWARDS, III (Principal Accounting Officer)
RICHARD M. CAHILL - - ------------------------ Director March 21, 1994 RICHARD M. CAHILL
MICHAEL B. ESSTMAN - - ------------------------ Director March 21, 1994 MICHAEL B. ESSTMAN
KENT B. FOSTER - - ------------------------ Director March 21, 1994 KENT B. FOSTER
THOMAS W. WHITE - - ------------------------ Director March 21, 1994 THOMAS W. WHITE