MEMBER'S CORNER

TELCO RETIREES ASSOCIATION, INC.

To NRLN Executives:

I have taken the liberty of forwarding to each of you a copy of our “end of the year” report to the full membership of the Telco Retirees Association, Inc.

Since some of the items contained in this summary bear a direct relationship to issues that have impacted your organizations, I felt you might find our “letter” of some value.

S.K.

To Officers/Directors and Association Members:

As we close the second year of our efforts to establish an independent retiree association of former Pacific Bell/Nevada Bell employees, I should like to extend the personal appreciation of your Officers and Directors for your continued support, objective criticisms and wise counsel.

The TelCo Retirees Association, Inc. began its formation in January ‘03 with the initial selection of Officers and Directors (who represent 467 years of Pacific Bell service). Initial membership applications were placed in the mail during the first quarter of 2003. We now have in excess of 1600 members located in 37 states and British Columbia and the United Kingdom. Our furthest “eastern” member resides in Rhode Island.

Our federal non-profit status was formally approved by the Internal Revenue Service on April 9, 2004. The State of California approved our incorporation on August 12, 2004. In addition, the California State Franchise Tax Board approved non-profit status for our Association on September 8, 2004.

Officer/Director meetings were conducted in San Diego on March 29, 2004 and November 9, 2004. Critical issues involved increasing our membership, securing liability insurance coverage for Officers and Directors (tentatively approved and now awaiting documentation), updating corporate Bylaws and selecting Publicity and Legislative Chairmen. (These positions remain open at this writing and we are actively seeking members who have an interest and ability to assume responsibilities for these critical positions.) Please contact S.K. Emery, President, TelCo Retirees Association, Inc. at skemery@pacbell.net.

As you know, the Association filed a formal California Public Utilities complaint against SBC on August 27, 2004 seeking compliance with tariff schedule Cal. P.U.C. A5. At the time of this letter, the Commission has not yet established a hearing date for this complaint. The critical issue of this complaint involves a violation of the existing telephone concession service tariff that impacts retirees presently living outside of an SBC serving area. We continue to pressure the CPUC for a hearing date on this issue.

The Officers and Directors approved a General Membership Meeting in San Diego the second week of February, 2005. The meeting is open to all Association members and their guests. The issues to be reviewed and approved include the annual budget, expansion of our retiree membership, a discussion of forthcoming quarterly meetings throughout California, legislative issues affecting retirees and the formal election of Officers and Directors. The announcement of location, date and time will be made in advance of the General Membership Meeting.

The Association will hold a “Quarterly” Membership Meeting in the greater Orange County area during March 2005. While specific invitations will go out to all members living in Orange County, all TelCo Association members are welcome to attend any scheduled quarterly meetings. Plans are also being developed for a quarterly meeting in San Francisco and Sacramento. Announcements of meeting details will be made in advance.

Because the “quality of our retirement years” continues to be influenced by a number of factors, including state and federal legislatures, corporations, the Federal Administration, various health providers, Medicare, pharmaceutical companies and inflation, I felt the following issues warranted your attention.

Pacific Telesis Group “Effective April 1, 1997, PTG became a wholly owned subsidiary of SBC.”

“Effective October 26, 1998, SNET became a wholly owned subsidiary of SBC.”

“Effective October 8, 1999, Ameritech became a wholly owned subsidiary of SBC.”

Pacific Telesis Group Pension Plan funding (effective date of plan, 1984) reported the following Net Assets Available for Benefits, End of Year:

2000 - $7,125,916,000.00

2001 - $6,131,812,000,00

2002 - $4,160,140,000.00

2003 - (Not available until first quarter ‘05)

Since benefit payments to retirees and their beneficiaries (as reported by SBC on its annual form 5500) range between $300 and $400 million annually, a cursory look at the assets available (above) would indicate a serious negative trend in our Defined Pension Benefit Plan.

(During the late 90’s, two issues occurred that further impacted pension funding.) The Pacific Telesis Group “Salaried Employees Pension Funds” were merged with the bargained for employees’ funds. Secondly, $300 million in our pension funds were transferred into retiree Health Benefits.

(Effective December 1, 1992, the SBC Plan was amended to include a medical benefit component in addition to the normal retirement benefits to fund a portion of the postretirement obligations for retirees and their beneficiaries in accordance with Section 401 (h) of the IRC. In accordance with the IRC Section, the SBC Plan’s investment in the account may not be used for, or diverted to, any purpose other than providing health benefits for retirees and their beneficiaries. Any assets transferred to the 401 (h) account from the Defined Benefit Pension Plan in a qualified transfer of excess pension plan assets (and any income allocable thereto) that are not used during the plan year must be transferred out of the account to the pension plan. Plan participants do not contribute to the 401 (h) account. Employer contributions or qualified transfers to the account are determined annually and are at the discretion of the plan sponsor.

On behalf of the pension plans, investment managers for the SBC Master Pension Trust have purchased and written various option contracts, which are agreements between two parties giving the owner, under a purchased option, the right, but not the obligation, to buy (call) or sell (put) a specified item at a fixed price (exercise or strike) during a specified period, and under a written option the obligation but not the right to buy or sell a specified item at a fixed price. These option contracts are intended to economically hedge the Master Pension Trust’s investments in foreign and domestic securities.

While SBC pension funds placed in option contracts to date have been miniscule when compared to the other corporate retirement pension fund investments, this program has the potential for extremely high risk. The Quest Corporation is currently being challenged by the Association of U.S. West retirees for the loss of $67 million when plan fiduciaries invested in a “put option” or a “futures contract.” (The loss occurred in a matter of weeks.)

For Pacific Telesis Group salaried retirees, the last ad hoc pension increase was granted in May 2000!

While the above facts create a disquieting atmosphere for retirees in general, the current expansion and profitability of the SBC Corporation gives promise that future earnings will continue to grow. Further, the recent decision of the CPUC in support of the company’s efforts to “upgrade the (UNE-p) cost to Competitive Local Exchange Carriers was hopeful. And, lastly, the FCC hearings on the conflict between the “Baby Bells” and CLEC’s as it relates to “interconnection costs” may at long last resolve this polemical issue.