Item 1. Business
(a) General Development of Business.
Lincoln Telecommunications Company ("the Company") was incorporated on November 24, 1980, as a Nebraska corporation, and is a holding company, with The Lincoln Telephone and Telegraph Company ("LT&T"), a Delaware corporation, as its principal subsidiary. The Company owns 100% of the issued and out- standing common stock of LT&T. Other subsidiaries which are wholly-owned by the Company are LinTel Systems Inc. ("LinTel") and Prairie Communications, Inc. ("Prairie Communications"), both of which are Nebraska corporations. For general development of business during the past five years and descriptions of the subsidiaries, see 1993 Exhibit 13.1 Building On Our Strengths and Exhibit 13.3 Management's Discussion and Analysis of Financial Conditions and Results of Operations (M D & A) which are included in Annual Report pages 2-5 and 31 - 37, respectively.
(b) Financial Information About Industry Segments.
See Exhibit 13.2 Auditors' Report and Financial Statements which are included in Annual Report pages 14 - 18.
(c) Narrative Description of Business.
Subsidiary Operations.
LT&T, the Company's principal subsidiary, operates a telephone system for both local and long distance service in the southeastern 22 counties of Nebraska, having in service 238,142 landline customer access lines as of December 31, 1993. This is a contiguous geographical area. There are a total of 138 exchanges and 148 central offices (there being ten central offices in Lincoln).
*The statistics in this table do not include cellular access lines and Company access lines in service as of the dates shown. TRAFFIC STATISTICS FOR 12 MONTHS ENDED DECEMBER 31, 1993
Long distance calls completed 98,569,280 Direct Distance Dialed 93,868,838 All other 4,700,442 Form 10-K Item 1. cont'd.
LT&T provides access services by connecting the communications networks of interexchange and cellular carriers with the equipment and facilities of end users by use of its public switched networks or through private lines. Access charges, payable by interexchange and cellular carriers, provided $47,602,000, $44,513,000 and $43,620,000 of the Company's consolidated revenues for the years ended December 31, 1993, 1992 and 1991 respectively.
Since 1986, telecommunications companies in Nebraska have been permitted to increase local exchange rates up to 10% in any consecutive 12-month period without review by the Nebraska Public Service Commission ("NPSC"). However, LT&T must provide at least 60 days notice to affected customers and conduct public informational meetings. If at least 3% of all affected subscribers sign a formal complaint within 120 days from such notice, opposing the rate increase, the NPSC must hold and complete a hearing with regard to the complaint within 90 days to determine whether the proposed rates are fair, just and reasonable, and within 60 days after the close of hearing, enter an order adjusting the rates at issue.
Rates for all other services are not subject to regulation by the NPSC. Rates for other services may be revised by a telecommunications company by filing a rate list with the NPSC which is effective after ten days' notice to the NPSC. Quality of service regulation over interexchange and local exchange service is retained by the NPSC. Nebraska has completely deregulated the provision of mobile radio services and radio paging services.
Regardless of whether a particular rate increase is subject to regulato- ry review, the Company's ability to raise rates will be determined by various factors, including economic and competitive circumstances in effect at the time. See Exhibit 13.3 M D & A which is included in Annual Report pages 35 and 36.
LT&T's wireless services include cellular operations and wide area paging services. LT&T operates a cellular telecommunications system in the Lincoln, Nebraska Metropolitan Statistical Area ("MSA"). LT&T also manages the limited partnership which is the license holder for Iowa Rural Service Area ("RSA") 1 which serves the southwestern six counties of Iowa.
On December 31, 1991, Prairie Communications acquired a 50% interest in Omaha Cellular General Partnership (OCGP). The remaining 50% interest in OCGP is owned by Centel Nebraska, Inc. (Centel-Neb). The Company purchased its 50 percent share from Centel Cellular Co. (Centel) for $11.9 million cash and a discount note from OCGP that it holds for $23.8 million, which note proceeds were paid to Centel and Centel Nebraska. For a two-year period beginning on December 31, 1996, Prairie Communications will have an opportunity to purchase Centel's remaining 50 percent interest in OCGP at fair market value. OCGP is the general partner of and holds approximately 55% of the partnership inter- ests in Omaha Cellular Limited Partnership, which provides cellular telecommu- nications services in Douglas and Sarpy Counties in Nebraska and Pottawattamie County, Iowa. Omaha Cellular Limited Partnership conducts business under the trade name First Cellular Omaha. Prairie Communications is the managing partner of OCGP. Form 10-K Item 1. cont'd.
The Company also owns 13.1% of the outstanding shares of Nebraska Cellular Telephone Corporation ("NCTC"). NCTC is the holder of cellular operating licenses issued by the Federal Communications Commission ("FCC") for Nebraska RSA Nos. 533 through 542.
The following table sets forth certain information about the Company's cellular operations.
________________________ (1) Systems are as follows:
Lincoln MSA - Lancaster County, Nebraska Omaha MSA - Douglas and Sarpy Counties in Nebraska and Pottawattamie County in Iowa Nebraska RSAs - 89 of the 90 Nebraska counties not in the Omaha and Lincoln MSAs Iowa RSA 1 - Southwestern six counties of Iowa
(2) The date LT&T's operating license was granted in the case of the Lincoln MSA, and the date of the Company's initial acquisition of an interest in the licensee in the case of other systems.
(3) In addition, Prairie Communications has an option to purchase an additional 27.6% interest in the licensee of the Omaha MSA at fair market value.
(4) Includes the allocable portion of the 14.1% interest in the licensee held by the Omaha MSA licensee.
(5) Based upon Donnelley Marketing Information Services population data for 1992. Pops shown for Lincoln and Omaha MSAs are virtually all covered by the networks of these systems. According to estimates available to the Company, approximately 60% of the pops shown for Nebraska RSAs and approximately 90% of the pops shown for Iowa RSA 1 are covered by the networks of these systems.
(6) Does not include the Omaha MSA licensee's 14.1% interest in Iowa RSA 1 (which system has been separately included in the table) or the Omaha MSA licensee's 8.3% interest in Iowa RSA 8 (representing 54,125 pops and 4,492 net pops). Form 10-K Item 1. cont'd.
(7) The data regarding the subscribers and net subscribers is not disclosed herein because it is not considered material to the Company's consolidated operations.
The licensing, ownership, construction, operation and sale of control- ling interests in cellular telephone systems are subject to regulation by the FCC. The FCC licenses for the Company's Lincoln MSA and Omaha MSA cellular operations expire between October 1994 and October 1996, while FCC licenses for the Company's Iowa RSA and Nebraska RSA cellular operations expire between July 1999 and August 2000. All renewal applications for these licenses must be received by the FCC not later than 30 and not more than 60 days in advance of their respective expiration dates and must be approved by the FCC. It is possible that there may be competition for these FCC licenses upon expiration, and any such competitors may apply for such licenses within the same time frame as the Company. However, incumbent cellular providers generally retain their FCC licenses upon a demonstration of substantial compliance with FCC regulations and substantial service to the public. The FCC will only consider competitors' applications if it determines the Company has not made such a demonstration. Although the Company has no reason to believe that the FCC renewal applications will not be granted by the FCC, no assurance can be given.
For a five-year period ending after the date of the grant of a cellular license by the FCC (the "fill-in period"), the licensee has the exclusive right to apply to serve areas within the RSA or the MSA. At the end of the fill-in period, any person may apply to serve the unserved areas in the MSA or RSA. The fill-in period for both the Lincoln and Omaha MSAs has expired and no person has filed to serve any unserved areas in those locations. The fill- in periods for the Nebraska RSAs and the Iowa RSA expire between November 1994 and May 1995.
LinTel is a "reseller" of long distance services, primarily in LT&T's exchange service area, and provides this service by aggregating its customers' traffic to take advantage of volume discounts offered by national networks. During 1992, the Company had 105.8 million minutes of long distance traffic, an increase of 2 million minutes from 1991. For 1993, the Company had 110.0 million minutes of long distance traffic, up 4.0% over 1992. The Company has a variety of calling programs for both residential and business customers.
LinTel also sells and services a wide range of PBX, key system and other communications equipment to large and small businesses, including products manufactured by ROLM and Northern Telecom. These systems typically include a variety of special features such as automatic call distribution, voice mail, and LAN functionality.
Nebraska State Income and Local Property Taxes
In separate decisions during 1991, the Nebraska Supreme Court (the Court) decided that the personal property tax system of the State as applied in 1989 and in 1990 was unconstitutional. On January 22, 1993, the Court affirmed a determination by the Nebraska State Board of Equalization and Form 10-K Item 1. cont'd.
Assessment whereby 18.81% of the taxes paid for 1990 should be refunded to the Company and certain other taxpayers. In mid-1993, LT&T and LinTel entered into agreements with the Nebraska Tax Commissioner pursuant to which LT&T and LinTel agreed to accept a refund of 18.81% of the property taxes paid for the 1989 and 1990 tax years. Such agreements were subsequently approved by the NPSC. As a result of these actions, the Company recorded refunds or credits of approximately $1,359,000 and $1,494,000 in 1993 and 1992, respectively.
During 1991, the Nebraska Legislature responded to the 1991 Court decisions by eliminating personal property taxes for 1991 only, substituting increased rates for state corporate income taxes and creating a 4% surcharge on depreciation deductions. In July 1992, the Nebraska Supreme Court declared this action on taxes to be unconstitutional. Subsequently, the Nebraska Legislature replaced the 1991 action on taxes with a similar bill enacted in May 1992, including a 2% surcharge on depreciation deductions. The combina- tion of these two actions lowered the Company's state income taxes by approxi- mately $575,000 for 1992.
Due to a constitutional amendment approved by the voters in 1992, the constitutional issues appear to have been resolved.
Also in 1991, the Legislature adopted a measure requiring the NPSC to approve the disposition of tax reductions telephone companies might derive from changes in tax laws. LT&T set aside $2,017,000 in 1992 and $24,000 in 1993 to meet this anticipated requirement. To accomplish these objectives, LT&T has offered equipment for customers of Enhanced 911 services, frame relay services to governmental agencies or equipment or services to educational agencies, all at reduced rates.
Competition.
Competitors now offer private line and switched voice and data services in or adjacent to the territory served by LT&T, thus permitting bypass of local telephone facilities. In addition, satellite transmission services, cellular communications and other services permit bypass of the local exchange network. These alternatives to local exchange service represent a potential threat to LT&T's long-term ability to provide local exchange service at economical rates.
In order to meet this competition, LT&T has deployed new technology for its local exchange network to increase operating efficiencies and to provide new services to its customers. These new technologies include conversion of all LT&T switches to digital technology, installation of over 1,250 miles of fiber optic cable, and installation of SS7, an out-of-band signalling system, to over 60 percent of its access lines.
LT&T faces competition in the market for customer premises telephone equipment. LT&T offers state-of-the-art customer premises telephone equipment through well-trained and experienced market representatives with long term relationships with customers. In so doing, LT&T believes that it effectively competes in this market segment. Form 10-K Item 1. cont'd.
With respect to cellular mobile communications service, the FCC has granted two licenses to provide cellular service in each MSA or RSA. One license was granted to a company that provides local telephone service in the area or to a group affiliated with the local service company (the "Wireline Carrier"). The other license was granted to a company that does not provide local telephone service and is not affiliated with a local service company in the area (the "Non-Wireline Carrier"). LT&T currently operates as the Wireline Carrier in the Lincoln, Nebraska MSA and Prairie Communications is the manager of the limited partnership which operates as the Wireline Carrier in the Omaha, Nebraska, MSA.
The Company faces significant competition from the Non-Wireline Carrier in such markets and from other communications technologies that now exist, such as specialized mobile radio systems and paging services, or other communications technologies that may be developed or perfected. In addition to providing cellular mobile communications service, the Company sells and leases cellular mobile equipment in competition with numerous equipment retailers. The providers in each market compete for customers principally on the basis of services offered, the quality of customer service and price. The Company has designed and deployed cellular systemswith greater radio signal coverage than competitive systems, particularly for portable cellular tele- phone users. The Company believes it has benefited competitively from such design.
In connection with provision of long distance telecommunications services, LinTel competes with other long distance service providers such as AT&T, MCI, and U.S. Sprint. This market is now competitive, and regulation by the FCC and the NPSC has been substantially reduced since divestiture by AT&T of the Bell Operating Companies and the advent of equal access. The prices for long distance services offered by LinTel compare favorably with prices of similar services offered by competitors. LinTel believes that pricing contributed to an increase of its minutes of use from 105.8 million minutes in 1992 to 110.0 million minutes in 1993, a 4.0 percent increase.
Since the mid-1980's, the Company's business strategy has been to position itself as a "one-stop" telecommunications services provider. Long- term business relationships with its customers have strengthened the Company's business position. The Company believes that its customers value the fact that it is the "local company" whose goal is to meet the customers' total communications needs.
The long-range effect of competition on the provision of telecommunica- tions services and equipment will depend on technological advances, regulatory actions at both the state and federal levels, court decisions, and possible future state and federal legislation. See 1993 Annual Report to Stockholders, pages 35, 36 and 37.
Employees.
The Company and its subsidiaries employed 1,618 persons (1,422 employed by its principal subsidiary, LT&T) at the end of 1993. As of December 1993, Form 10-K Item 2.
Item 2. cont'd.
approximately 62 percent of the Company's and subsidiaries' employees were represented by the Communications Workers of America ("CWA"), which is affiliated with the AFL-CIO. New three-year contracts with the CWA were signed in May 1992 as respects LinTel bargaining unit employees and October 1992 as respects LT&T bargaining unit employees. The LT&T contract with the CWA will expire on October 14, 1995, and the LinTel contract with the CWA will expire on May 19, 1995. The Company believes its relationship with its employees is good and constructive. See Exhibit 13.4 Selected Financial Data which is included in Annual Report pages 38 and 39.
(d) Financial Information About Foreign and Domestic Operations and Export Sales.
Not applicable.
Item 2. Properties
LT&T's telephone system consists of switching and transmission equipment, cellular radio facilities, fiber optic systems and distribution plant, through 138 communities within the state of Nebraska. Among the larger exchanges served are Lincoln, Hastings, Beatrice, York, Nebraska City, Plattsmouth and Seward.
For fiscal year 1993, LT&T owned the equipment, plant and facilities which were utilized in its telephone system. LT&T leases four locations on which business offices are located. The total annual rentals for such leased offices are less than $100,000 and the duration of such leases range from one to six years. LT&T owns its remaining business office locations. Additional- ly, LT&T leases the majority of the locations on which the sites of towers for its Lincoln MSA cellular system are located. Annual rentals on the sites are approximately $40,000, and the duration of the unexpired portions of such leases range from four months to five years, with options to renew thereafter.
LinTel leases transmission facilities and switching facilities in connection with its Lincoln Telephone Long Distance Division. All of its office locations are leased. Annual rentals are approximately $135,000, and the duration of the unexpired portions of such leases range from four months to four years.
It is the opinion of Company management, including the Engineering Director of LT&T, that the properties of LT&T are suitable and adequate to provide modern and effective telecommunications services within its franchised area, including both local and long distance service. The capacity for furnishing these services, both currently and for forecast growth, are under constant surveillance by the Engineering Director and his staff. Facilities are put to full utilization after installation and appropriate testing, according to two-, three- and five-year construction plans.
Form 10-K Item 2. cont'd.
LT&T's continuing construction programs are divided between meeting growth demands (population and service) and upgrading its telephone equipment and plant. Conversion to digital switching systems was completed in 1992.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Form 10-K PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
Company Common Stock is traded on the Nasdaq National Market under the symbol "LTEC." The following table sets forth the high and low bid quotations for the periods indicated, as reported in "The Wall Street Journal." These quotations represent prices between dealers without adjustments for markups, markdowns or commissions and may not represent actual transactions. (All market information and dividend amounts reflect adjustment for the Company's 100% stock dividend paid January 6, 1994.)
(b) Holders
The approximate number of holders of the Company's Common Stock on December 31, 1993 was 8,000.
(c) Dividends
The long-term debt agreements of LT&T contain various restric tions, including those relating to payment of dividends by LT&T to the Company and to holders of LT&T's 5% Preferred Stock. Notes payable to banks also contain various restrictions. At December 31, 1993, approximately $22,050,000 of LT&T's retained earnings were available for payment of cash dividends to the Company and to holders of LT&T's 5% Preferred Stock under the most restrictive provisions of such agreements.
Item 6.
Item 6. Selected Financial Data
See Exhibit 13.4 Selected Financial Data which is included in Annual Report pages 38 and 39.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Form 10-K Item 7. cont'd.
See Exhibit 13.3 M D & A which is included in Annual Report pages 31-37.
On March 17, 1993, the Board of Directors elected to expense the entirety of the Company's post-retirement benefit obligation accumulated as of January 1, 1993, of approximately $38,450,000 in the first quarter of 1993 for financial reporting purposes. This obligation, net of related income taxes, is approximately $23,550,000. This one-time charge equals $1.45 per share of Common Stock, net of tax impact. This action was taken in compli ance with Statement of Financial Accounting Standards No. 106, which imposes new accounting rules regarding insurance and other benefits provided to retirees and allows employers to recognize this obligation either immediately or on an amortized basis.
Recent Developments
On March 16, 1994, the Company announced that due to changes in technology, customer growth and usage demand for cellular services in their respective markets, Lincoln Telephone Cellular and First Cellular Omaha have entered into an agreement with AT&T to purchase digital cellular telephone systems to replace the existing analog systems serving these markets. These digital systems are expected to increase capacity and performance in these markets. The new Omaha and Lincoln systems are expected to be operational in April, 1994 and mid-1995, respectively.
The implementation of these system upgrades will cause the early retirement of existing analog equipment prior to the expiration of its anticipated useful life. As a result, Lincoln Telecommu- nications will, in the first quarter of 1994, write down the value of these assets. This write down is expected to result in a one- time, non-cash reduction of first quarter 1994 earnings of approximately $3.2 million, or $0.10 per share.
Item 8.
Item 8. Financial Statements and Supplementary Data
See Exhibit 13.2 Auditors' Report and Financial Statements and Exhibit 13.4 Selected Financial Data which are included in Annual Report, pages 15 - 30 and 38 - 39, respectively.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None
Form 10-K PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, pages 3 - 7. See also Exhibit 13.5 Officers, Directors, and Committees which is included in Annual Report page 40.
Item 10. cont'd. Form 10-K
Term of office of above named executive officers: At the meeting of the Board of Directors each year held immediately following the Annual Meeting of Stock- holders, the officers are elected to serve for the ensuing year, or until their successors are duly elected and qualified.
Compliance with Section 16(a) of the Exchange Act
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, page 16.
Item 11.
Item 11. Executive Compensation
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, page 14.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security ownership of certain beneficial owners.
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, pages 1 and 2.
(b) Security ownership of management.
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, pages 6 - 7.
(c) Changes in control.
None.
Item 13.
Item 13. Certain Relationships and Related Transactions
(a) Transactions with management and others.
On February 1, 1994, the Company entered into an agreement (Agreement) with Sahara Enterprises, Inc. (Sahara), then an owner of approximately 16.6% of the issued and outstanding common stock of the Company in connection with a firm commitment underwritten public offering of shares of the Company's common stock by Sahara (Offering). The Agreement provides (i) the Company with a right of first refusal to purchase additional shares of Company common stock from Sahara for 120 days following the closing of the Offering; (ii) that, concurrently with the closing of the Offering, the Company will purchase 250,000 shares of Company common stock from Sahara at the Offering price less 2 percent for future use in funding the Company's stock obligations under one or more of its employee benefit plans; and (iii) that Sahara will indemnify and reimburse the Company against payment of an amount not to exceed the first $200,000 of the Company's out-of-pocket expenses in connection with the Offering.
Item 13. cont'd. Form 10-K
On February 1, 1994, the Company filed a Form S-3 Registration Statement with the Securities and Exchange Commission in connec- tion with the Offering. On March 24, 1994, the Offering was closed and pursuant thereto, Sahara sold 1,850,000 shares of Company common stock to the public, reducing its ownership of the issued and outstanding Company common stock to approximately 10%. Concurrently therewith and pursuant to the Agreement, the Company purchased 250,000 shares of Company common stock from Sahara for a purchased price of $15.68 per share, a transaction which the Company financed with current assets. Exclusive of shares of common stock received by Sahara pursuant to Company stock dividends or stock splits, Sahara (or its wholly-owned subsidiary) beneficially owned the shares sold in the Offering and the 250,000 shares sold to the Company concurrently therewith since the Company's formation as a holding company effective February 23, 1981.
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, pages 6 - 7.
(b) Certain business relationships.
See Proxy Statement for Annual Meeting of Stockholders, April 27, 1994, pages 3 and 4.
(c) Indebtedness of management.
Not applicable.
(d) Transactions with promoters.
Not applicable.
Form 10-K PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements: Independent Auditors' Report Consolidated Balance Sheets, December 31, 1993 and 1992 Consolidated Statements of Earnings, Years ended December 31, 1993, 1992, and 1991 Consolidated Statements of Common Stock Investment and Preferred Stock, Years ended December 31, 1993, 1992, and 1991 Consolidated Statements of Cash Flows Years ended December 31, 1993, 1992, and 1991 Summary of Significant Accounting Policies Notes to Consolidated Financial Statements, December 31, 1993, 1992, and 1991 Management's Discussion and Analysis of Financial Conditions and Results of Operations Statements listed in (a) 1 are all incorporated by reference, see Exhibit 13.2 Auditors' Report and Financial Statements, Exhibit 13.3 M D & A, and Exhibit 13.4 Selected Financial Data which are included in Annual Report pages 14 - 30, pages 31-37, and pages 38-39, respectively.
2. Financial Statement schedules required by Item 8 of this form.
Schedule Independent Auditors' Report
Temporary Investments and Cash Equivalents, Years ended December 31, 1993, 1992 and 1991 I
Property and Equipment, Years ended December 31, 1993, 1992, and 1991 V
Accumulated Depreciation and Amortization of Property and Equipment - Years ended December 31, 1993, 1992, and 1991 VI
Valuation and Qualifying Accounts - Years ended December 31, 1993, 1992, and 1991 VIII
Short-Term Borrowings - Years ended December 31, 1993, 1992, and 1991 IX
Note Receivable from Related Party - Years ended December 31, 1993, 1992, and 1991 X Form 10-K Item 14. (a) cont'd. Schedule
Supplementary Statements of Earnings Information - Years ended December 31, 1993, 1992, and 1991 XI
All other schedules are omitted because they are not applicable or the information required is immaterial or is presented within the consoli- dated financial statements and notes thereto.
3. Exhibits Required by Item 601 of Regulation S-K
Exhibit 3: Articles of Incorporation and By-Laws
(3.1) Articles of Incorporation with amendments (incorpo- rated by reference to Exhibit 3 of the Company's Form S-3 Registration Statement No. 33-21557).
(3.2) By-Laws as amended March 16, 1994
Exhibit 4: Instruments defining the rights of security holders, including indentures
(4.1) Rights Agreement, dated as of June 21, 1989, between the Company and Harris Trust and Savings Bank (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K dated June 21, 1989).
(4.2) Amendment to Rights Agreement, dated as of September 7, 1989, between the Company and Harris Trust and Savings Bank (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated September 7, 1989).
(4.3) Amendment No. 2 to Rights Agreement dated June 15, 1993, between the Company and Mellon Securities Trust Company (incorporated by reference to Exhibit 4.5 of the Company's Form S-3 Registration Statement No. 33-52117.)
(4.4) The Indenture issued by The Lincoln Telephone and Telegraph Company (incorporated by reference to LT&T's Form S-9, File 2-39373, effective March 1, 1971).
(4.5) Supplemental Indenture Eleven dated June 1, 1990, (incorporated by reference to the Company's Annual Report on Form 10-K for the year ending December 31, 1990).
Item 14. (a) cont'd. Form 10-K
Exhibit 10: Material Contracts
(10.1) The 1989 Stock and Incentive Plan approved by the Corporation's stockholders on April 26, 1989, was filed as an exhibit to Form S-8, File 33-39551, effective March 22, 1991, and is incorporated herein by this reference.
(10.2) A specimen of the Executive Benefit Plan agreement, as amended through January 1, 1993, provided to the executive officers and director-level managers of the Corporation and its affiliates, and a specimen of the Key Executive Employment and Severance Agreement provided to the executive officers of the Corporation and its affiliates on December 23, 1987, were filed as Exhibit 10 to the Company's 1992 Form 10-K Report and are incorporated herein by reference.
Exhibit 13: Annual Report to Security Holders
(13.1) Building On Our Strengths
(13.2) Auditors' Report and Financial Statements
(13.3) Management's Discussion and Analysis of Financial Conditions and Results of Operations (M D & A)
(13.4) Selected Financial Data
(13.5) Officers, Directors and Committees
Exhibit 21: Subsidiaries of the Registrant.
The Company owns all the outstanding common stock of The Lincoln Telephone and Telegraph Company, LinTel Systems Inc., and Prairie Communications, Inc. See Exhibit 13.3 M D & A which is included in Annual Report pages 35-36.
Exhibit 23: Accountants' Consent
(23.1) Accountants' consent is attached hereto.
Exhibits 9, 11, 12, 16, 18, 19, 22, 24 and 28 are not applicable.
(b) No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
(c) All exhibits required by Item 601 of Regulation S-K incorporated by reference as indicated in paragraph (a) 3 above.
(d) Not applicable. Form 10-K 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.
LINCOLN TELECOMMUNICATIONS COMPANY
By /s/ Michael J. Tavlin Date March 16, 1994 Michael J. Tavlin, Vice President-Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
President and Chief Executive Officer /s/ Frank H. Hilsabeck (Principal Executive Officer) Frank H. Hilsabeck
Senior Vice President and Chief Financial Officer /s/ Robert L. Tyler (Principal Financial Officer) Robert L. Tyler
Vice President - Treasurer /s/ Michael J. Tavlin and Secretary Michael J. Tavlin
/s/ Duane W. Acklie Director Duane W. Acklie
/s/ William W. Cook, Jr. Director William W. Cook, Jr.
/s/ Terry L. Fairfield Director March 16, 1994 Terry L. Fairfield
/s/ James E. Geist Director James E. Geist
/s/ J. Taylor Greer Director J. Taylor Greer
/s/ John Haessler Director John Haessler
/s/ Charles R. Hermes Director Charles R. Hermes
Form 10-K Signatures. cont'd.
/s/ George Kelm Director George Kelm
- ------------------------- Director Donald H. Pegler, Jr.
/s/ Paul C. Schorr, III Director Paul C. Schorr, III
/s/ William C. Smith Director William C. Smith
/s/ James W. Strand Director James W. Strand
/s/ Charles N. Wheatley Director Charles N. Wheatley
/s/ Thomas C. Woods, III Director Thomas C. Woods, III
/s/ Lyn Wallin Ziegenbein Director Lyn Wallin Ziegenbein
KPMG PEAT MARWICK
ACCOUNTANTS' CONSENT
The Board of Directors Lincoln Telecommunications Company:
We consent to the incorporation by reference in the registration statement on Forms S-3 and S-8 of Lincoln Telecommunications Company of our report, dated February 4, 1994, relating to the consolidated balance sheets of Lincoln Telecommunications Company and subsidiaries as of December 31, 1993 and 1992, and related consolidated statements of income, common stock investment and preferred stock and cash flows and relating to the schedules to Form 10-K for each of the years in the three-year period ended December 31, 1993, which reports appear in the December 31, 1993 annual report on Form 10-K of Lincoln Telecommunications Company.
/s/ KPMG Peat Marwick
March 15, 1994 Lincoln, Nebraska
LINCOLN TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
Independent Auditors' Report and Schedules Form 10-K Securities and Exchange Commission
December 31, 1993, 1992 and 1991
(With Independent Auditors' Report Thereon)
LINCOLN TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
Index to Schedules Filed
Schedule
Independent Auditors' Report
Temporary Investments and Cash Equivalents - Years ended December 31, 1993, 1992 and 1991 I Condensed Financial Information of Parent Company: Balance Sheets - December 31, 1993 and 1992 Statements of Income - Years ended December 31, 1993, 1992 and 1991 Statements of Stockholders' Equity - Years ended December 31, 1993, 1992 and 1991 Statements of Cash Flows - Years ended December 31, 1993, 1992 and 1991 III
Property and Equipment - Years ended December 31, 1993, 1992 and 1991 V
Accumulated Depreciation and Amortization of Property and Equipment - Years ended December 31, 1993, 1992 and 1991 VI
Valuation and Qualifying Accounts - Years ended December 31, 1993, 1992 and 1991 VIII
Short-term Borrowings - Years ended December 31, 1993, 1992 and 1991 IX
Note Receivable from Related Party - Years ended December 31, 1993, 1992 and 1991 X
Supplementary Statements of Earnings Information - Years ended December 31, 1993, 1992 and 1991 XI
All other schedules are omitted because they are not applicable or the information required is immaterial or is presented within the consolidated financial statements and notes thereto.
KPMG Peat Marwick
Certified Public Accountants
1600 FirsTier Building Lincoln, NE 68508
Two Central Park Plaza Suite 1501 Omaha, NE 68102
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders Lincoln Telecommunications Company:
Under date of February 4, 1994, we reported on the consolidated balance sheets of Lincoln Telecommunications Company and Subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, common stock investment and preferred stock and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in the 1993 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year ended December 31, 1993. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick
Lincoln, Nebraska February 4, 1994
Schedule I
4 Schedule I,cont.
6 Schedule I,cont.
Schedule III
3 Schedule III,cont.
Note: Effective January 6, 1994, the Company paid a 100% stock dividend to stockholders of record on December 27, 1993, which has been treated as a stock split for financial reporting reporting purposes. Common stock, premium on common stock and all per share information has been retroactively adjusted to give effect to the stock dividend for all periods presented.
LINCOLN TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES Statements of Cash Flows (Parent Company Only)
Schedule V
Note 1: Depreciation on property and equipment is determined by using the straight-line method based on estimated service and remaining lives. The composite depreciation rate for telephone property was 6.5% in 1993, 6.9% in 1992 and 6.7% in 1991.
Schedule VI
Schedule VIII
Schedule IX
Schedule X
Schedule XI
LINCOLN TELECOMMUNICATIONS COMPANY EMPLOYEE AND STOCKHOLDER DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1993, 1992 and 1991
(1) Statement of Purpose and Summary of Significant Accounting Policies
The Lincoln Telecommunications Company Employee and Stockholder Dividend Reinvestment and Stock Purchase Plan (Plan) provides stockholders and eligible employees of Lincoln Telecommuni- cations Company (Company) and its subsidiaries with a convenient and economical way to invest cash dividends and optional cash contributions to purchase additional shares of common stock of the Company.
Shares are offered for purchase to all stockholders and all regular full-time and regular part-time employees of the Company with not less than six months of service. Any individual who owns 5 percent or more of the total combined voting power of value of all classes of stock of the Company is not eligible to participate in the Plan.
The Company paid, on January 6, 1994, a 100% stock dividend to stockholders of record on December 27, 1993.
The accompanying financial statements have been prepared on an accrual basis and present the financial condition of the Plan and its revenues and common stock purchases. All assets are held for the purchase of common stock of the Company.
Effective on June 15, 1993, Mellon Securities Trust Company became the transfer agent, registrar, rights agent and Plan administrator. Prior to that date, the Company was the transfer agent, registrar and Plan administrator and Harris Trust and Savings Bank was the rights agent.
(2) Participation
Stock for the Plan is purchased on the open market. The basis for the purchase price of the stock allocated to the Plan participants is the average price paid during the 5-day trading period preceding and including the dividend payment date. Employee purchases are at 95% of such price while purchases by non-employee participants are at 100% of such price.
Participants in the Plan may use cash dividends declared on stock owned and optional cash contributions to purchase (Continued)
LINCOLN TELECOMMUNICATIONS COMPANY EMPLOYEE AND STOCKHOLDER DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Notes to Financial Statements (Cont'd)
additional stock. Any contributions received by approximately eight days before the end of each calendar quarter will be used to purchase shares of stock as of the next dividend date.
Shares purchased in the open market for the Plan aggregated 57,604, 60,636 and 51,171 during 1993, 1992 and 1991, respectively. At December 31, 1993, the agent for the Plan held 628,534 shares registered for participants.
(3) Income Taxes
No provision is made for income taxes relating to the operations of the Plan. Any income tax consequences of participation in the Plan are that of the participants.
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.
LINCOLN TELECOMMUNICATIONS COMPANY EMPLOYEE AND STOCKHOLDER DIVIDEND REINVESTMENT AND STOCK PRUCHASE PLAN (Name of Plan)
By /s/ Michael J. Tavlin
Michael J. Tavlin Vice President-Treasurer
Date March 16, 1994