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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8606
BELL ATLANTIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-2259884
(State of Incorporation) (I.R.S. Employer
Identification No.)
1095 AVENUE OF THE AMERICAS 10036
NEW YORK, NEW YORK (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER (212) 395-2121
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---
At March 31, 1999, 1,552,284,960 shares of the registrant's Common Stock were
outstanding, after deducting 23,961,365 shares held in treasury.
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Table of Contents
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Item No.
Part I. Financial Information Page
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1. Financial Statements
Condensed Consolidated Statements of Income
For the three months ended March 31, 1999 and 1998 1
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 2-3
Condensed Consolidated Statement of Changes in Shareowners' Investment
For the three months ended March 31, 1999 4
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6-11
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12-28
3. Quantitative and Qualitative Disclosures About Market Risk 28
Part II. Other Information
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1. Legal Proceedings 29
6. Exhibits and Reports on Form 8-K 29
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Part I - Financial Information
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Item 1. Financial Statements
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Bell Atlantic Corporation and Subsidiaries
(Dollars in Millions, Except Per Share Amounts) (Unaudited) Three Months Ended March 31,
1999 1998
- -----------------------------------------------------------------------------------------------------
OPERATING REVENUES $7,967 $7,651
OPERATING EXPENSES
Employee costs, including benefits and taxes 2,018 2,304
Depreciation and amortization 1,504 1,411
Other operating expenses 2,367 2,224
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5,889 5,939
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OPERATING INCOME 2,078 1,712
Income from unconsolidated businesses 34 23
Other income and (expense), net 19 14
Interest expense 315 310
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Income before provision for income taxes and extraordinary item 1,816 1,439
Provision for income taxes 674 529
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INCOME BEFORE EXTRAORDINARY ITEM 1,142 910
Extraordinary item
Early extinguishment of debt, net of tax -- (17)
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NET INCOME 1,142 893
Redemption of investee preferred stock -- (2)
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NET INCOME AVAILABLE TO COMMON SHAREOWNERS $1,142 $ 891
==================================
BASIC EARNINGS PER COMMON SHARE:
Income available to common shareowners before extraordinary item $ .74 $ .58
Extraordinary item -- (.01)
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Net Income Available to Common Shareowners $ .74 $ .57
==================================
Weighted-average shares outstanding (in millions) 1,553 1,553
==================================
DILUTED EARNINGS PER COMMON SHARE:
Income available to common shareowners before extraordinary item $ .72 $ .57
Extraordinary item -- (.01)
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Net Income Available to Common Shareowners $ .72 $ .56
==================================
Weighted-average shares - diluted (in millions) 1,582 1,579
==================================
Dividends declared per common share $ .385 $.385
==================================
See Notes to Condensed Consolidated Financial Statements.
1
CONDENSED CONSOLIDATED BALANCE SHEETS
Bell Atlantic Corporation and Subsidiaries
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Assets
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(Dollars in Millions) (Unaudited) March 31, December 31,
1999 1998
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CURRENT ASSETS
Cash and cash equivalents $ 368 $ 237
Short-term investments 539 786
Accounts receivable, net of allowances of $599 and $593 6,535 6,560
Inventories 555 566
Prepaid expenses 628 522
Other 276 411
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8,901 9,082
--------------------------
PLANT, PROPERTY AND EQUIPMENT 84,672 83,064
Less accumulated depreciation 47,381 46,248
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37,291 36,816
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INVESTMENTS IN UNCONSOLIDATED BUSINESSES 3,699 4,276
OTHER ASSETS 5,084 4,970
--------------------------
TOTAL ASSETS $54,975 $55,144
==========================
See Notes to Condensed Consolidated Financial Statements.
2
CONDENSED CONSOLIDATED BALANCE SHEETS
Bell Atlantic Corporation and Subsidiaries
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Liabilities and Shareowners' Investment
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(Dollars in Millions, Except Per Share Amounts) (Unaudited) March 31, December 31,
1999 1998
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CURRENT LIABILITIES
Debt maturing within one year $ 2,286 $ 2,988
Accounts payable and accrued liabilities 6,233 6,105
Other 1,370 1,438
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9,889 10,531
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LONG-TERM DEBT 17,707 17,646
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EMPLOYEE BENEFIT OBLIGATIONS 10,185 10,384
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DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 2,431 2,254
Unamortized investment tax credits 216 222
Other 527 551
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3,174 3,027
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MINORITY INTEREST, INCLUDING A PORTION SUBJECT TO
REDEMPTION REQUIREMENTS 320 330
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PREFERRED STOCK OF SUBSIDIARY 201 201
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SHAREOWNERS' INVESTMENT
Series preferred stock ($.10 par value; none issued) -- --
Common stock ($.10 par value; 1,576,246,325 shares and
1,576,246,325 shares issued) 158 158
Contributed capital 13,402 13,368
Reinvested earnings 1,844 1,371
Accumulated other comprehensive loss (729) (714)
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14,675 14,183
Less common stock in treasury, at cost 649 593
Less deferred compensation - employee stock ownership plans 527 565
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13,499 13,025
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TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT $54,975 $55,144
==============================
See Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' INVESTMENT
Bell Atlantic Corporation and Subsidiaries
(Dollars in Millions and Shares in Thousands) (Unaudited) Three Months Ended March 31, 1999
Shares Amount
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COMMON STOCK
Balance at beginning and end of period 1,576,246 $ 158
---------------------------------
CONTRIBUTED CAPITAL
Balance at beginning of period 13,368
Shares issued:
Employee plans 34
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Balance at end of period 13,402
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REINVESTED EARNINGS
Balance at beginning of period 1,371
Net income 1,142
Dividends declared (598)
Shares issued:
Employee plans (73)
Tax benefit of dividends paid to ESOPs 2
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Balance at end of period 1,844
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of period (714)
Foreign currency translation adjustments, net of tax (18)
Unrealized gains on securities, net of tax 3
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Balance at end of period (729)
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TREASURY STOCK
Balance at beginning of period 22,887 593
Shares purchased 3,835 208
Shares distributed:
Employee plans (2,747) (151)
Shareowner plans (14) (1)
---------------------------------
Balance at end of period 23,961 649
---------------------------------
DEFERRED COMPENSATION - ESOPs
Balance at beginning of period 565
Amortization (38)
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Balance at end of period 527
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TOTAL SHAREOWNERS' INVESTMENT $13,499
================
See Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Bell Atlantic Corporation and Subsidiaries
(Dollars in Millions) (Unaudited) Three Months Ended March 31,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,142 $ 893
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,504 1,411
Extraordinary item, net of tax -- 17
Income from unconsolidated businesses (34) (23)
Dividends received from unconsolidated businesses 29 54
Amortization of unearned lease income (37) (30)
Deferred income taxes, net 218 56
Investment tax credits (6) (7)
Other items, net 33 60
Changes in certain assets and liabilities, net of effects from
acquisition/disposition of businesses (363) (228)
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Net cash provided by operating activities 2,486 2,203
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CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments 245 (17)
Additions to plant, property and equipment (1,711) (1,659)
Investment in leased assets (24) (2)
Proceeds from leasing activities 32 50
Investments in unconsolidated businesses, net (106) (128)
Acquisition of businesses, less cash acquired (2) --
Proceeds from disposition of businesses 612 4
Other, net (44) 37
-----------------------
Net cash used in investing activities (998) (1,715)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings -- 2,642
Principal repayments of borrowings and capital lease obligations (26) (36)
Early extinguishment of debt -- (200)
Net change in short-term borrowings with original
maturities of three months or less (980) (1,851)
Proceeds from financing of cellular assets 380 --
Dividends paid (598) (594)
Proceeds from sale of common stock 151 325
Purchase of common stock for treasury (208) (605)
Net change in outstanding checks drawn on controlled disbursement accounts (76) (88)
-----------------------
Net cash used in financing activities (1,357) (407)
-----------------------
Increase in cash and cash equivalents 131 81
Cash and cash equivalents, beginning of period 237 323
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Cash and cash equivalents, end of period $ 368 $ 404
=======================
See Notes to Condensed Consolidated Financial Statements.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Bell Atlantic Corporation and Subsidiaries
(Unaudited)
1. Basis of Presentation
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The accompanying unaudited condensed consolidated financial statements have been
prepared based upon Securities and Exchange Commission rules that permit reduced
disclosure for interim periods. These financial statements reflect all
adjustments that are necessary for a fair presentation of results of operations
and financial condition for the interim periods shown including normal recurring
accruals. The results for the interim periods are not necessarily indicative of
results for the full year. For a more complete discussion of significant
accounting policies and certain other information, you should refer to the
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998.
We have reclassified certain amounts from prior year's data to conform to the
1999 presentation.
2. New Accounting Standards
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Costs of Computer Software
Effective January 1, 1999, we adopted Statement of Position (SOP) No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." Under SOP No. 98-1, we capitalize the cost of internal-use
software which has a useful life in excess of one year. Such costs sometimes
include payroll-related costs for internally developed software. Subsequent
additions, modifications or upgrades to internal-use software are capitalized
only to the extent that they allow the software to perform a task it currently
does not perform. Software maintenance and training costs are expensed in the
period in which they are incurred. Also, we now capitalize interest associated
with the development of internal-use software.
Costs of Start-Up Activities
Effective January 1, 1999, we adopted SOP No. 98-5, "Reporting on the Costs of
Start-Up Activities." Under this accounting standard, we expense costs of
start-up activities as incurred, including pre-operating, pre-opening and other
organizational costs.
Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
requires that all derivatives be measured at fair value and recognized as either
assets or liabilities on our balance sheet. Changes in the fair values of
derivative instruments will be recognized in either earnings or comprehensive
income, depending on the designated use and effectiveness of the instruments.
Bell Atlantic must adopt SFAS No. 133 no later than January 1, 2000. We are
currently evaluating the provisions of SFAS No. 133 and have not yet determined
what the impact of adopting this statement will be on our future results of
operations or financial condition.
3. Commitments and Contingencies
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In connection with certain state regulatory incentive plan commitments, we have
deferred revenues, which will be recognized as the commitments are met or
obligations are satisfied under the plans. In addition, several state and
federal regulatory proceedings may require our operating telephone subsidiaries
to refund a portion of the revenues collected in the current and prior periods.
There are also various legal actions pending to which we are a party. We have
established reserves for specific liabilities in connection with regulatory and
legal matters that we currently deem to be probable and estimable.
We do not expect that the ultimate resolution of pending regulatory and legal
matters in future periods will have a material effect on our financial
condition, but it could have a material effect on our results of operations.
6
4. Comprehensive Income
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Comprehensive income consists of net income and other gains and losses affecting
shareowners' equity that, under generally accepted accounting principles, are
excluded from net income. For our company, such items consist primarily of
foreign currency translation gains and losses and unrealized gains and losses on
marketable equity investments.
The components of total comprehensive income for interim periods are presented
in the following table:
(Dollars in Millions) Three Months Ended March 31,
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1999 1998
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NET INCOME $1,142 $893
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OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments, net of tax (18) (102)
Unrealized gains on securities, net of tax 3 7
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(15) (95)
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TOTAL COMPREHENSIVE INCOME $1,127 $798
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5. Earnings Per Share
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The following table is a reconciliation of the numerators and denominators used
in computing earnings per share.
(Dollars and Shares in Millions, Except Per Share Amounts) Three Months Ended March 31,
----------------------------
1999 1998
----------------------------
NET INCOME AVAILABLE TO COMMON SHAREOWNERS
Income before extraordinary item $1,142 $ 910
Redemption of investee preferred stock --- (2)
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Income available to common shareowners before extraordinary item* 1,142 908
Extraordinary item --- (17)
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Net income available to common shareowners* $1,142 $ 891
==========================
BASIC EARNINGS PER COMMON SHARE
Weighted-average shares outstanding 1,553 1,553
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Income available to common shareowners before extraordinary item $ .74 $ .58
Extraordinary item --- (.01)
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Net income available to common shareowners $ .74 $ .57
==========================
DILUTED EARNINGS PER COMMON SHARE
Weighted-average shares outstanding 1,553 1,553
Effect of dilutive securities 29 26
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Weighted-average shares - diluted 1,582 1,579
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Income available to common shareowners before extraordinary item $ .72 $ .57
Extraordinary item --- (.01)
-------------------------
Net income available to common shareowners $ .72 $ .56
=========================
*Income and Net income available to common shareowners is the same for purposes
of calculating basic and diluted earnings per share.
Stock options to purchase 257,726 and 799,044 shares of common stock were
outstanding at March 31, 1999 and 1998 which were not included in the
computation of diluted earnings per share because the options' exercise price
was greater than the average market price of the common shares.
7
6. Debt
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Exchangeable Notes
Our long-term debt includes two series of exchangeable notes that were issued in
1998 by our wholly owned subsidiary, Bell Atlantic Financial Services, Inc.
(FSI). First, FSI issued $2,455 million of 5.75% senior exchangeable notes due
on April 1, 2003, which are exchangeable at the option of the holder into shares
of Telecom Corporation of New Zealand (TCNZ exchangeable notes). Second, FSI
issued $3,180 million of 4.25% senior exchangeable notes due on September 15,
2005, which are exchangeable at the option of the holder into shares of Cable
and Wireless Communications, plc (CWC exchangeable notes). The CWC exchangeable
notes were issued at a discount and at March 31, 1999 had a carrying value of
$3,198 million. The exchange prices were established at a 20% premium to the
TCNZ share price at the pricing date of the offering and at a 28% premium to the
CWC share price at the pricing date of the offering.
The TCNZ and CWC exchangeable notes must be marked-to-market if the fair value
of the underlying TCNZ shares rises to a level greater than 120% of the share
price at the pricing date of the offering, or the underlying CWC shares rises to
a level greater than 128% of the share price at the pricing date of the
offering. If either event should occur, we are required to increase the
applicable exchangeable note liability by the amount of the increase in the
share price over the exchange price. This mark-to-market transaction would
reduce income by the amount of the increase in the exchangeable note liability.
If the share price subsequently declines, the liability would be reduced (but
not to less than its amortized carrying value) and income would be increased. At
March 31, 1999, the fair values of the underlying TCNZ shares and CWC shares did
not exceed the recorded values of the debt liability and, therefore, no
mark-to-market adjustments were recorded to our financial statements.
Support Agreements
The TCNZ exchangeable notes have the benefit of a Support Agreement dated
February 1, 1998, and the CWC exchangeable notes have the benefit of a Support
Agreement dated August 26, 1998, both of which are between Bell Atlantic and
FSI. In each of the Support Agreements, Bell Atlantic guarantees the payment of
interest, premium (if any), principal and the cash value of exchange property
related to the notes should FSI fail to pay. Another Support Agreement between
Bell Atlantic and FSI dated October 1, 1992, guarantees payment of interest,
premium (if any) and principal on FSI's medium-term notes (aggregating $245
million at March 31, 1999) should FSI fail to pay. The holders of this FSI debt
do not have recourse to the stock or assets of our operating telephone
subsidiaries or TCNZ; however, they do have recourse to dividends paid to Bell
Atlantic by any of our consolidated subsidiaries as well as assets not covered
by the exclusion. The carrying value of the available assets reflected in our
condensed consolidated financial statements was approximately $14 billion at
March 31, 1999.
Issuance and Early Extinguishment of Long-Term Debt
In April 1999, our operating telephone subsidiary New England Telephone and
Telegraph Company issued $200 million of 5.875% notes, due on April 15, 2009.
The proceeds from the issuance will be used to redeem $200 million of 7.375%
notes due on October 15, 2007. We will record a loss of approximately $1 million
related to this redemption in the second quarter of 1999.
7. Grupo Iusacell, S.A. de C.V.
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Grupo Iusacell, S.A. de C.V. (Iusacell), a Mexican wireless company that we
consolidate, and its principal shareholders entered into an agreement (the 1998
Restructuring Agreement) to restructure ownership of the company. This
restructuring, if completed, will result in the formation of a new holding
company with two classes of shares, one of which will trade publicly. The
restructuring is intended to increase the liquidity of Iusacell's publicly
traded shares and to increase the availability of debt financing to Iusacell.
In the first quarter of 1999, Iusacell borrowed $31 million from us under a $150
million subordinated convertible debt facility that expires in June 1999 (the
Facility). We immediately converted this debt into 44 million additional Series
A shares at a price of $.70 per share as contemplated by the 1998 Restructuring
Agreement. Under this same agreement, we sold 22 million of those shares to the
Peralta Group, the other principal shareholder of Iusacell, for $.70 per share.
As a result of this debt conversion and sale of shares to the Peralta Group, our
ownership of Iusacell increased to 47.2% as of March 31, 1999. At March 31,
1999, the total amount borrowed under the Facility was approximately $133
million.
8
The 1998 Restructuring Agreement also contemplates that the new Iusacell holding
company will engage in a rights offering to existing shareholders, and that we
and the Peralta Group, under certain circumstances, will engage in a secondary
public offering of a portion of our respective shares. These transactions would
reduce our ownership percentage to approximately 42%. We would, however,
continue to retain management control of Iusacell through the completion of
these transactions and, therefore, would continue to consolidate Iusacell's
results. The 1998 Restructuring Agreement also provides that any further
borrowings by Iusacell under the Facility will be immediately converted into
shares of Iusacell at a conversion price of $.70 per share. It further provides
that the Peralta Group will purchase from us one-half of any shares received
from that debt conversion for $.70 per share.
8. Segment Information
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We have four reportable segments, which we operate and manage as strategic
business units and organize by products and services. Our segments are a
Domestic Telecom group which provides domestic wireline telecommunications
services; a Global Wireless group which provides domestic wireless
telecommunications services and includes foreign wireless investments; a
Directory group which is responsible for our domestic and international
publishing businesses and electronic commerce services; and an Other Businesses
group which includes our international wireline telecommunications investments,
lease financing and all other businesses.
We measure and evaluate our reportable segments based on adjusted net income,
which excludes undistributed corporate expenses and special items arising during
each period. Special items are transactions that management has excluded from
the business units results, but has included in reported consolidated earnings.
We generally account for intersegment sales of products and services and asset
transfers at current market prices. Intersegment revenues were not material in
1999 or 1998.
The following table provides operating financial information for our four
reportable segments and a reconciliation of segment results to consolidated
financial results:
(Dollars in Millions) Three Months Ended March 31,
1999 1998
- -------------------------------------------------------------------------------
OPERATING REVENUES
Domestic telecom $6,441 $6,268
Global wireless 994 860
Directory 553 534
Other businesses 35 32
-----------------------
Total segments 8,023 7,694
Reconciling items (56) (43)
-----------------------
Total consolidated $7,967 $7,651
=======================
NET INCOME
Domestic telecom $ 892 $ 833
Global wireless 56 29
Directory 162 153
Other businesses 39 25
-----------------------
Total segments 1,149 1,040
Reconciling items 3 5
Adjustments (10) (152)
-----------------------
Total consolidated $1,142 $ 893
=======================
Reconciling items include undistributed corporate expenses, corporate assets and
intersegment eliminations. Adjustments include special items, which consisted of
merger-related transition and integration costs and retirement incentive costs.
Special items affected solely our Domestic Telecom segment in both the first
quarters of 1999 and 1998.
9
9. Proposed Bell Atlantic - GTE Merger
- -----------------------------------------------
Bell Atlantic and GTE Corporation (GTE) have announced a proposed merger of
equals under a definitive merger agreement dated as of July 27, 1998. Under the
terms of the agreement, GTE shareholders will receive 1.22 shares of Bell
Atlantic common stock for each share of GTE common stock that they own. Bell
Atlantic shareholders will continue to own their existing shares after the
merger.
We expect the merger to qualify as a pooling of interests, which means that for
accounting and financial reporting purposes the companies will be treated as if
they had always been combined. The completion of the merger is subject to a
number of conditions, including certain regulatory approvals, receipt of
opinions that the merger will be tax-free, and the approval of the shareholders
of both Bell Atlantic and GTE. Special meetings to vote on the merger will be
held on May 18, 1999 for GTE shareholders and on May 19, 1999 for Bell Atlantic
shareholders.
We are working diligently to complete the merger by the end of 1999. However,
Bell Atlantic and GTE must obtain the approval of a variety of state and federal
regulatory agencies and, accordingly, the merger may close in the first half of
2000.
We have provided unaudited pro forma combined condensed financial statements of
income for the years ended December 31, 1998, 1997 and 1996 and a pro forma
combined condensed balance sheet at December 31, 1998 in a joint proxy statement
and prospectus filed with Securities and Exchange Commission and dated April 13,
1999.
In this interim report, we have presented the following unaudited combined
condensed pro forma financial statements for the period ended March 31, 1999.
These financial statements are presented assuming that the merger will be
accounted for as a pooling of interests, and include certain reclassifications
to conform to the presentation that will be used by the combined company and
certain pro forma adjustments that conform the companies' methods of accounting.
This information is presented for illustration purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if the merger had been completed at the date indicated. The
information does not necessarily indicate the future operating results or
financial position of the combined company. For a more complete discussion of
pro forma adjustments and other financial information, you should refer to the
pro forma financial information presented in the joint proxy statement and
prospectus.
- ---------------------------------------------------------
Pro Forma Combined Condensed Statement of Income
- ---------------------------------------------------------
(Dollars in Millions, Except Per Share Amounts) (Unaudited) Three Months Ended March 31, 1999
- -------------------------------------------------------------------------------------------------
Operating revenues $13,846
Operating expenses 10,077
-------------------------
Operating income 3,769
Income from unconsolidated businesses 139
Other income and (expense), net (1)
Interest expense 639
Provision for income taxes 1,208
-------------------------
Income from continuing operations $ 2,060
=========================
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations per common share $ .75
Weighted-average shares outstanding (in millions) 2,736
-------------------------
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations per common share $ .74
Weighted-average shares - diluted (in millions) 2,774
-------------------------
10
- ----------------------------------------------------
Pro Forma Combined Condensed Balance Sheet
- ----------------------------------------------------
(Dollars in Millions) (Unaudited) At March 31, 1999
- ----------------------------------------------------------------------------
ASSETS
Current assets
Cash and temporary cash investments $ 1,422
Receivables, net 11,016
Other current assets 2,964
------------
15,402
------------
Plant, property and equipment, net 60,254
Investments in unconsolidated businesses 7,405
Other assets 14,817
------------
Total assets $97,878
============
LIABILITIES AND SHAREOWNERS' INVESTMENT
Current liabilities
Debt maturing within one year $ 6,612
Accounts payable and accrued liabilities 11,396
Other current liabilities 2,593
------------
20,601
------------
Long-term debt 32,027
------------
Employee benefit obligations 14,516
------------
Deferred credits and other liabilities 8,343
------------
Shareowners' investment
Common stock (2,760,106,281 shares) 276
Contributed capital 20,328
Reinvested earnings 4,583
Accumulated other comprehensive loss (1,125)
------------
24,062
Less common stock in treasury, at cost 649
Less deferred compensation - employee stock ownership plans 1,022
------------
22,391
------------
Total liabilities and shareowners' investment $97,878
============
11
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
- -------------------------------------
OVERVIEW
- -------------------------------------
Our results for the first quarter of 1999 reflect strong market demand for voice
and data services in our Domestic Telecom business and robust operating
performance by our Global Wireless group. We reported net income of $1,142
million or $.72 diluted earnings per share for the three month period ended
March 31, 1999, compared to net income of $893 million or $.56 diluted earnings
per share for the three month period ended March 31, 1998. Our reported results
for both periods were affected by special items. After adjusting for such items,
net income would have been $1,152 million or $.73 diluted earnings per share in
the first quarter of 1999 and $1,045 million or $.66 diluted earnings per share
in the first quarter of 1998. The table below summarizes reported and adjusted
results of operations for each period.
(Dollars in Millions, Except Per Share Amounts) Three Months Ended March 31,
1999 1998
- -------------------------------------------------------------------------------
Operating revenues $7,967 $7,651
Operating expenses 5,889 5,939
----------------------------
Operating income 2,078 1,712
REPORTED NET INCOME 1,142 893
----------------------------
Special items - pre-tax
Merger transition costs 17 9
Retirement incentive costs -- 240
----------------------------
Total special items - pre-tax 17 249
Tax effect of special items 7 97
----------------------------
Total special items - after-tax 10 152
----------------------------
ADJUSTED NET INCOME $1,152 $1,045
============================
DILUTED EARNINGS PER SHARE - REPORTED $ .72 $ .56
DILUTED EARNINGS PER SHARE - ADJUSTED $ .73 $ .66
Share and per share amounts for the three-month period ended March 31, 1998 have
been adjusted to reflect a two-for-one common stock split on June 1, 1998.
The following table shows how special items are reflected in our condensed
consolidated statements of income for each period:
(Dollars in Millions) Three Months Ended March 31,
1999 1998
- -------------------------------------------------------------------------------
EMPLOYEE COSTS
Retirement incentive costs $-- $240
Merger transition costs 2 3
OTHER OPERATING EXPENSES
Merger transition costs 15 6
----------------------------
TOTAL SPECIAL ITEMS - PRE-TAX 17 249
Tax effect of special items 7 97
----------------------------
TOTAL SPECIAL ITEMS - AFTER-TAX $10 $152
============================
12
- -----------------------------------------------
Retirement Incentives
- -----------------------------------------------
In the first quarter of 1998, we recorded costs of $240 million (pre-tax) as a
result of 1,731 associate employees electing to leave the company under a
voluntary retirement program. The costs were comprised of special termination
pension and postretirement benefit amounts, as well as employee costs for other
items. These costs were reduced by severance and postretirement medical benefit
reserves established in 1993 and transferred to the pension and postretirement
benefit liabilities as employees accepted the retirement incentive offer. The
retirement incentive program covering management employees ended in March 1997
and the program covering associate employees was completed in September 1998.
The severance and postretirement medical reserve balances were fully utilized at
December 31, 1998.
- -----------------------------------------------
Merger-related Costs
- -----------------------------------------------
In connection with the Bell Atlantic-NYNEX merger, which was completed in August
1997, we recorded pre-tax transition and integration costs of $17 million in the
first quarter of 1999 and $9 million in the first quarter of 1998.
Transition and integration costs represent costs associated with integrating the
operations of Bell Atlantic and NYNEX, such as systems modifications costs,
advertising and branding costs, and costs associated with the elimination and
consolidation of duplicate facilities, relocation and training. Transition and
integration costs are expensed as incurred.
Merger-related costs were comprised of the following amounts in the first
quarters of 1999 and 1998:
(Dollars in Millions) Three Months Ended March 31,
1999 1998
- -------------------------------------------------------------------------------
TRANSITION AND INTEGRATION COSTS
Systems modifications $16 $6
Advertising -- --
Branding -- 3
Relocation, retraining and other 1 --
--------------------------------
TOTAL TRANSITION AND INTEGRATION COSTS $17 $9
================================
- -----------------------------------------------
SEGMENTAL RESULTS OF OPERATIONS
- -----------------------------------------------
We have four reportable segments, which we operate and manage as strategic
business units and organize by products and services. Our segments are Domestic
Telecom, Global Wireless, Directory and Other Businesses. You can find
additional information about our segments in Note 8 to the condensed
consolidated financial statements.
We measure and evaluate our reportable segments based on adjusted net income,
which excludes undistributed corporate expenses and special items arising during
each period. Special items are transactions that management has excluded from
the business units' results, but has included in reported consolidated earnings.
We previously described these special items in the Overview section. Special
items affected solely our Domestic Telecom segment in both the first quarters of
1999 and 1998.
13
- ------------------------------------------------------------
Domestic Telecom
- ------------------------------------------------------------
Our Domestic Telecom segment consists primarily of our nine operating telephone
subsidiaries that provide local telephone services from Maine to Virginia
including voice and data transport, enhanced and custom calling features,
network access, directory assistance, private lines and public telephones. This
segment also provides customer premises equipment distribution, systems
integration, billing and collections, and Internet access services. Domestic
Telecom represents the aggregation of our domestic wireline business units
(consumer, enterprise, general, and network services), that focus on specific
markets to increase revenues and customer satisfaction.
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS - ADJUSTED BASIS
OPERATING REVENUES
Local services $3,488 $3,347 4.2%
Network access services 1,944 1,907 1.9
Long distance services 474 502 (5.6)
Ancillary services 535 512 4.5
-----------------------
6,441 6,268 2.8
-----------------------
OPERATING EXPENSES
Employee costs 1,806 1,827 (1.1)
Depreciation and amortization 1,336 1,262 5.9
Other operating expenses 1,614 1,626 (.7)
-----------------------
4,756 4,715 .9
-----------------------
OPERATING INCOME $1,685 $1,553 8.5
=======================
INCOME FROM UNCONSOLIDATED BUSINESSES $ 2 $ 24 (91.7)
-----------------------
ADJUSTED NET INCOME $ 892 $ 833 7.1
-----------------------
OPERATING REVENUES
Local Services Revenues
Local services revenues are earned by our operating telephone subsidiaries from
the provision of local exchange, local private line, public telephone (pay
phone) and value-added services. Value-added services are a family of services
that expand the utilization of the network. These services include products such
as Caller ID, Call Waiting and Return Call.
Growth in local services revenues of $141 million or 4.2% in the first quarter
of 1999 was primarily due to higher usage of our network facilities. This growth
was generated, in part, by an increase in access lines in service of 4.0% from
March 31, 1998. We had 42,133,000 switched access lines in service at March 31,
1999 compared to 40,512,000 switched access lines in service at March 31, 1998
(1998 access lines have been restated from the previously disclosed amount).
Access line growth primarily reflects higher demand for Centrex services and an
increase in additional residential lines.
Local services revenue growth in the first quarter of 1999 also reflects strong
customer demand and usage of our data transport and digital services such as
Frame Relay, ISDN (Integrated Services Digital Network) and SMDS (Switched
Multi-megabit Data Service). Revenues from our value-added services were boosted
in the first quarter by marketing and promotional campaigns offering new service
packages.
Network Access Services
Network access services revenues are earned from end-user subscribers and long
distance and other competing carriers who use our local exchange facilities to
provide usage services to their customers. Switched access revenues are derived
from fixed and usage-based charges paid by carriers for access to our local
network. Special access revenues originate from carriers and end-users that buy
dedicated local exchange capacity to support their private networks. End-user
access revenues are earned from our customers and from resellers who purchase
dial-tone services.
14
- -------------------------------------------------------------
Domestic Telecom - continued
- -------------------------------------------------------------
Our network access services revenues grew $37 million or 1.9% in the first
quarter of 1999 as compared to the same period in 1998. This growth was mainly
attributable to higher customer demand, as reflected by growth in access minutes
of use of 7.0% from the first quarter of 1998. Volume growth also reflects a
continuing expansion of the business market, particularly for high-capacity
services. In the first three months of 1999, demand for special access services
was robust, reflecting a greater utilization of the network by Internet service
providers and other high-capacity users. Higher network usage by alternative
providers of intraLATA toll services and higher end-user revenues attributable
to an increase in access lines in service also contributed to revenue growth in
the first quarter of 1999. Volume-related growth was largely offset by net price
reductions mandated by federal and state price cap and incentive plans. The
Federal Communications Commission (FCC) regulates the rates that we charge long
distance carriers and end-user subscribers for interstate access services. We
are required to file new access rates with the FCC each year under the rules of
the Price Cap Plan.
In July 1998, we implemented interstate price decreases of approximately $175
million on an annual basis. The rates included amounts necessary to recover our
operating telephone subsidiaries' contribution to the FCC's universal service
fund. The FCC has created a multi-billion dollar interstate fund to link schools
and libraries to the Internet and to subsidize low-income consumers and rural
healthcare providers. Under the FCC's rules, all providers of interstate
telecommunications services must contribute to the fund. The subsidiaries'
contributions to the universal service fund are included in Other Operating
Expenses. Our rates are subject to change every quarter due to potential
increases or decreases in our contribution to the universal service fund.
Changes in required contributions to that fund increased rates by approximately
$12 million on an annual basis in October 1998. Rates were reduced by
approximately $18 million annually in January 1999 and by approximately $4
million annually in April 1999 to reflect, among other things, lower required
contributions to the fund. These rates will be in effect through June 1999.
Beginning in the third quarter of 1998, intrastate access charges in New York
were reduced by $94 million annually due to a New York State Public Service
Commission order. This reduction is, in part, an acceleration of access revenue
reductions expected under the New York Performance Regulation Plan and, in
addition, will be partially offset by increased revenues attributable to the
federal universal service fund.
Long Distance Services
Long distance services revenues are earned primarily from calls made to points
outside a customer's local calling area, but within the same service area of our
operating telephone subsidiaries (intraLATA toll). Other long distance services
that we provide include 800 services, Wide Area Telephone Service (WATS),
corridor services and long distance services outside of our region.
The decline in long distance services revenues of $28 million or 5.6% in the
first quarter of 1999 was principally caused by the competitive effects of
presubscription for intraLATA toll services. Presubscription, which is being
offered in most of our states throughout the region, permits customers to use an
alternative provider of their choice for intraLATA toll calls without dialing a
special access code when placing a call. In response to presubscription, we have
implemented customer win-back and retention initiatives that include toll
calling discount packages and product bundling offers. The adverse impact on
long distance services revenues resulting from presubscription was partially
mitigated by increased network access services revenues for usage of our network
by the alternative providers. The adverse impact was also partially offset by
additional revenues generated from higher calling volumes.
We believe that the effects of competition for long distance services, including
competitive pricing and customer selection of alternative providers of intraLATA
toll services, will continue to impact revenue trends. You can find additional
information on presubscription under "Other Factors That May Affect Future
Results-Competition-IntraLATA Toll Services."
Ancillary Services
Our ancillary services include such services as billing and collections for long
distance carriers, collocation and usage of separately priced (unbundled)
components of our network by competitive local exchange carriers, systems
integration, voice messaging, Internet access, customer premises equipment and
wiring and maintenance services.
15
- --------------------------------------------------------
Domestic Telecom - continued
- --------------------------------------------------------
In the first quarter of 1999, we recognized higher ancillary services revenues
of $23 million or 4.5% over the corresponding period last year. This revenue
growth was principally due to higher payments received from competitive local
exchange carriers for interconnection of their network with our network and for
the purchase of unbundled network elements, as provided for by the
Telecommunications Act of 1996 (1996 Act). We also recognized higher revenues
from our voice messaging, billing and collections and systems integration
services.
OPERATING EXPENSES
Employee Costs
Employee costs, which consist of salaries, wages and other employee
compensation, employee benefits and payroll taxes, declined in the first quarter
of 1999 by $21 million or 1.1%, as compared to the same period in 1998. This
expense reduction was largely attributable to lower work force levels and a
reduction in associate overtime pay for repair and maintenance activity. These
cost reductions were partially offset by salary and wage increases for
management and associate employees.
Pension and benefit costs also declined slightly in the first three months of
1999 due to a number of factors, including lower pension costs as a result of
favorable pension plan investment returns and changes in plan provisions and
actuarial assumptions. These factors were substantially offset by higher savings
plan contributions, increased health care costs caused by inflation, and benefit
plan improvements provided for under new contracts with associate employees.
Depreciation and Amortization
Depreciation and amortization expense increased $74 million or 5.9% in the first
three months of 1999 principally due to growth in depreciable telephone plant
and changes in the mix of plant assets. The growth in telephone plant was
largely attributable to increased capital expenditures to support the expansion
of our network. The adoption of Statement of Position (SOP) No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" also contributed to the increase in depreciation expense in the
first quarter of 1999, but to a lesser extent. Under this new accounting
standard, computer software developed or obtained for internal use is now
capitalized and amortized. Previously, we expensed most of these software
purchases in the period in which they were incurred. For additional information
on SOP No. 98-1, see Note 2 to the condensed consolidated financial statements.
These expense increases were partially offset by the effect of lower rates of
depreciation.
Other Operating Expenses
The decline in other operating expenses of $12 million or .7% in the first three
months of 1999 was primarily due to SOP No. 98-1. Lower purchases of routine
maintenance software and lower taxes other than income further contributed to
the decline in other operating expenses in the first quarter of 1999.
These factors were substantially offset by higher interconnection payments to
competitive local exchange and other carriers to terminate calls on their
networks and additional Year 2000 readiness costs. We also recognized higher
costs in the first quarter of 1999 associated with entering new businesses such
as long distance and data services.
The higher payments for termination of calls to competitive carriers' networks
were the result of state regulatory decisions requiring us to pay "reciprocal
compensation" for the large volume of one-way traffic from our customers to
customers of other carriers, primarily calls to Internet service providers. On
February 26, 1999, the FCC confirmed that such traffic is interstate and
interexchange in nature and not subject to the reciprocal compensation
requirements of the 1996 Act. Because previous state regulatory decisions were
based upon a view that Internet access calls are "local" rather than interstate
and interexchange in nature, we have asked those regulators to revisit their
prior interpretations. Unless state regulators follow the FCC's interpretation,
these reciprocal compensation payments are expected to grow to approximately
$350 million in 1999. In New York, the state commission has decided to conduct
an expedited proceeding to determine the appropriate compensation for Internet
and other one-way traffic. The FCC also has initiated a proceeding to consider
adopting rules governing inter-carrier compensation for this traffic in the
future.
Income From Unconsolidated Businesses
The decline in income from unconsolidated businesses in the first quarter of
1999 was primarily due to the effect of the disposition of a portion of our
video operations in the prior year.
16
- ------------------------------------------------------
Global Wireless
- ------------------------------------------------------
Our Global Wireless segment provides wireless telecommunications services to
customers in 24 states in the United States and includes foreign wireless
investments servicing customers in Latin America, Europe and the Pacific Rim.
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- -----------------------------------------------------------------------------
RESULTS OF OPERATIONS
OPERATING REVENUES
Wireless services $994 $860 15.6%
--------------------
OPERATING EXPENSES
Employee costs 138 123 12.2
Depreciation and amortization 158 137 15.3
Other operating expenses 547 424 29.0
--------------------
843 684 23.2
--------------------
OPERATING INCOME $151 $176 (14.2)
--------------------
LOSS FROM UNCONSOLIDATED BUSINESSES $ (5) $(54) 90.7
--------------------
NET INCOME $ 56 $ 29 93.1
====================
OPERATING REVENUES
First quarter 1999 revenues earned from our consolidated wireless businesses
grew by $134 million or 15.6%, as compared to the same period in 1998. This
revenue growth was largely attributable to our domestic cellular subsidiary,
Bell Atlantic Mobile, which contributed $123 million to revenue growth. This
growth was principally due to more customers and increased usage of our domestic
wireless services. Our domestic cellular customer base grew 16.6% in the first
three months of 1999. Volume-related revenue growth was partially offset by
competitive pricing factors. Total revenue per subscriber by our domestic
cellular operations was $48.03 in the three month period ended March 31, 1999,
compared to $48.40 in the corresponding period in 1998. Revenues from Iusacell
S.A. de C.V. (Iusacell), our Mexican wireless investment, grew $16 million or
23.5% during the first three months of 1999, principally as a result of
subscriber growth and higher rates charged for services.
Revenue growth from our domestic and international cellular businesses was
partially offset by the effect of the December 1998 sale of our paging business.
OPERATING EXPENSES
Employee Costs
Employee costs at our wireless subsidiaries increased by $15 million or 12.2% in
the first three months of 1999 principally as a result of higher work force
levels at Bell Atlantic Mobile. Employee costs at Iusacell were essentially
unchanged in the first quarter of 1999, compared to the same period in 1998.
Depreciation and Amortization
Depreciation and amortization expense increased by $21 million or 15.3% in the
first three months of 1999. This increase was mainly attributable to growth in
depreciable cellular plant at both our Bell Atlantic Mobile and Iusacell
subsidiaries due to the addition of new network cellular sites.
Other Operating Expenses
In the first quarter of 1999, other operating expenses at our Global Wireless
subsidiaries increased by $123 million or 29.0% principally as a result of
increased service costs at Bell Atlantic Mobile due to the growth in the
subscriber base, including additional costs of equipment, higher sales
commissions and higher roaming payments to wireless carriers. Higher service
costs at our Iusacell subsidiary also contributed to expense growth in the first
three months of 1999, but to a lesser extent. These factors were partially
offset by the effect of the December 1998 sale of our paging business.
17
- ---------------------------------------------------
Global Wireless - continued
- ---------------------------------------------------
LOSS FROM UNCONSOLIDATED BUSINESSES
In the first quarter of 1999, the decline in equity losses from unconsolidated
businesses was principally due to improved operating results from our
investments in Omnitel Pronto Italia S.p.A. (Omnitel), an international wireless
investment, and PrimeCo Personal Communications, L.P. (PrimeCo), a personal
communications services (PCS) joint venture. Both Omnitel's and PrimeCo's
operating results were fueled by strong subscriber growth. PrimeCo's results
also included a gain on the sale of operations in Hawaii.
In March 1999, Bell Atlantic Mobile formed a joint venture with Crown Castle
International Corporation for the primary purpose of financing its investment in
network cellular towers. Bell Atlantic Mobile, together with certain
partnerships in which it is the managing partner (the managed entities),
contributed to the joint venture approximately 1,460 network cellular towers in
exchange for approximately $380 million in cash and an equity interest of
approximately 37.7% in the joint venture. Bell Atlantic Mobile and the managed
entities have leased back a portion of the network towers, and the joint venture
will lease the remaining space to third parties. The joint venture also plans to
build new towers.
- ---------------------------------------------------
Directory
- ---------------------------------------------------
Our Directory segment consists of our domestic and international publishing
businesses, including print directories and Internet-based shopping guides as
well as website creation and hosting and other electronic commerce services.
This segment has operations principally in the United States and Central Europe.
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- --------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
OPERATING REVENUES
Directory services $553 $534 3.6%
----------------------------------
OPERATING EXPENSES
Employee costs 80 87 (8.0)
Depreciation and amortization 9 8 12.5
Other operating expenses 190 181 5.0
----------------------------------
279 276 1.1
----------------------------------
OPERATING INCOME $274 $258 6.2
==================================
NET INCOME $162 $153 5.9
OPERATING REVENUES
Operating revenues from our Directory segment improved by $19 million or 3.6% in
the first quarter of 1999 as compared to the same period in 1998. This revenue
growth was principally due to increased prices for certain directory services.
Higher business volumes including revenue from new Internet-based shopping
directory and electronic commerce services also contributed to revenue growth in
the first quarter of 1999, but to a lesser extent.
OPERATING EXPENSES
First quarter 1999 total operating expenses increased $3 million or 1.1% over
the corresponding period in 1998. This change was attributable to a rise in
other operating expenses of $9 million due to higher costs for advertising and
other general and administrative services and higher depreciation and
amortization expense of $1 million due to growth in depreciable plant. These
expense increases were largely offset by lower employee costs of $7 million
principally to due to a reduction in work force levels.
18
- -----------------------------------------------
Other Businesses
- -----------------------------------------------
Our Other Businesses segment includes international wireline telecommunications
investments in Europe and the Pacific Rim and lease financing and all other
businesses.
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- --------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
OPERATING REVENUES
Other services $35 $32 9.4%
----------------------------------
OPERATING EXPENSES
Employee costs 3 5 (40.0)
Depreciation and amortization -- 1 --
Other operating expenses 24 29 (17.2)
----------------------------------
27 35 (22.9)
----------------------------------
OPERATING INCOME (LOSS) $8 $(3) --
==================================
INCOME FROM UNCONSOLIDATED BUSINESSES $27 $35 (22.9)
NET INCOME $39 $25 56.0
OPERATING RESULTS
First quarter 1999 operating income results from our Other Businesses increased
$11 million over the first quarter 1998. This change was largely due to improved
operating revenue growth from our lease financing businesses.
Income from unconsolidated businesses declined by $8 million or 22.9% in the
first quarter of 1999 primarily as a result of higher equity losses from our
international wireline telecommunications investments.
19
- -------------------------------------------------
NONOPERATING ITEMS
- -------------------------------------------------
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- --------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest expense from continuing operations $ 315 $ 310 1.6%
Capitalized interest costs 21 20 5.0
-------------------------------
Total interest costs on debt balances $ 336 $ 330 1.8
===============================
Average debt outstanding $20,096 $20,057
Effective interest rate 6.7% 6.6%
The rise in interest cost in the first quarter of 1999 was principally
attributable to a higher effective interest rate and higher average debt
outstanding during the first three months of 1999, as compared to the same
period in 1998. This increase was partially offset by the effect of several
refinancings to lower rates of interest and redemptions of long-term debt by our
operating telephone subsidiaries in 1998.
(Dollars in Millions) Three Months Ended March 31,
1999 1998 % Change
- ----------------------------------------------------------------------------------------------
OTHER INCOME AND (EXPENSE), NET
Minority interest $ (22) $ (30) 26.7%
Foreign currency gains, net 18 1 --
Interest income 12 26 (53.8)
Gains on disposition of assets/business, net 1 12 --
Other, net 10 5 --
------------------------------
Total $ 19 $ 14 35.7
==============================
The change in other income and expense in the first quarter of 1999, as compared
to the same period in 1998, was due to changes in several components as shown in
the table above. First, foreign exchange gains were higher in 1999 as a result
of the discontinuation of highly inflationary accounting for our Iusacell
subsidiary, effective January 1, 1999. As a result of this change, Iusacell now
uses the Mexican peso as its functional currency and we expect that our earnings
will continue to be affected by any foreign currency gains or losses associated
with the U.S. dollar denominated debt issued by Iusacell.
The change in minority interest was mainly due to the repurchase of an outside
party's interest in one of our fully consolidated subsidiaries in connection
with the sale of our investment in Viacom Inc. (Viacom). As a result of this
transaction, we no longer record a minority interest expense related to the
outside party's share of the subsidiary's earnings.
Finally, the disposition of a leveraged lease in 1998 resulted in a gain on the
sale and additional interest income, which were both recognized in the prior
year.
(Dollars in Millions) Three Months Ended March 31,
1999 1998
- --------------------------------------------------------------------------------
EFFECTIVE INCOME TAX RATES 37.1% 36.8%
The effective income tax rate is the provision for income taxes as a percentage
of income before the provision for income taxes. Our effective income tax rate
for the first quarter of 1999 was higher than in the first quarter of 1998
principally as a result of lower tax credits in 1999.
20
- --------------------------------------------------
CONSOLIDATED FINANCIAL CONDITION
- --------------------------------------------------
(Dollars in Millions) Three Months Ended March 31,
1999 1998 $ Change
- ----------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN)
Operating activities $ 2,486 $ 2,203 $ 283
Investing activities (998) (1,715) 717
Financing activities (1,357) (407) (950)
---------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS $ 131 $ 81 $ 50
=============================================
We use the net cash generated from our operations and from external financing to
fund capital expenditures for network expansion and modernization, pay
dividends, and invest in new businesses. While current liabilities exceeded
current assets at March 31, 1999 and 1998 and December 31, 1998, our sources of
funds, primarily from operations and, to the extent necessary, from readily
available external financing arrangements, are sufficient to meet ongoing
operating and investing requirements. We expect that presently foreseeable
capital requirements will continue to be financed primarily through internally
generated funds. Additional debt or equity financing may be needed to fund
additional development activities or to maintain our capital structure to ensure
our financial flexibility.
- --------------------------------------------------
Cash Flows From Operating Activities
- --------------------------------------------------
Our primary source of funds continued to be cash generated from operations. The
increase in cash from operations primarily reflects improved operating income.
- --------------------------------------------------
Cash Flows Used In Investing Activities
- --------------------------------------------------
Capital expenditures continued to be our primary use of capital resources. The
majority of the capital expenditures was for our Domestic Telecom business, to
facilitate the introduction of new products and services, enhance responsiveness
to competitive challenges, and increase the operating efficiency and
productivity of the network. We invested approximately $1,444 million in our
Domestic Telecom business in the first quarter of 1999, compared to $1,483
million in the first quarter of 1998. We also invested approximately $267
million in our Wireless, Directory and Other Businesses in the first quarter of
1999, compared to $176 million during the same period last year. We expect
capital expenditures in 1999 to total approximately $8.1 billion, including
approximately $7.3 billion to be invested in our Domestic Telecom business. This
estimate includes approximately $500 million related to the implementation of
the new accounting standard on costs of computer software, SOP No. 98-1. You can
find additional information on SOP No. 98-1 in Note 2 to the condensed
consolidated financial statements. In 1998, capital expenditures totaled
approximately $7.4 billion, including $6.4 billion in our Domestic Telecom
business.
We invested $106 million in unconsolidated businesses during the first quarter
of 1999 and $128 million during the first quarter of 1998. In both years, these
cash investments were principally in PrimeCo to fund the build-out and
operations of its PCS network.
During the first quarter of 1999, we invested $6 million in short-term
investments, compared to $266 million in the first quarter of 1998. In 1998, we
pre-funded a vacation pay trust for the payment of certain employee benefits.
Beginning in 1999, we no longer pre-fund the vacation pay trust. Proceeds from
the sales of all short-term investments were $251 million in the first quarter
of 1999, compared to $249 million in the corresponding period of 1998.
In the first quarter of 1999, we received cash proceeds of $612 million in
connection with the disposition of our remaining investment in Viacom.
21
- --------------------------------------------------
Cash Flows Used In Financing Activities
- --------------------------------------------------
As in prior quarters, dividend payments were a significant use of capital
resources. We determine the appropriateness of the level of our dividend
payments on a periodic basis by considering such factors as long-term growth
opportunities, internal cash requirements, and the expectations of our
shareowners. In the first quarter of 1999, we announced a quarterly cash
dividend of $.385 per share.
In March 1999, we received cash proceeds of $380 million from a financing
transaction involving cellular assets between Bell Atlantic Mobile and Crown
Castle International Corporation, as described earlier under "Segmental Results
of Operations-Global Wireless."
We reduced our total debt (including capital lease obligations) by $641 million
from December 31, 1998 primarily through the use of cash proceeds received from
the disposition of our remaining investment in Viacom. Our debt ratio was 59.7%
as of March 31, 1999, compared to 61.2% as of March 31, 1998 and 61.3% as of
December 31, 1998. For the remainder of 1999, we do not expect our total debt
levels to change significantly from the balances at December 31, 1998, subject
to any modification of our investment strategy.
As of March 31, 1999, we had in excess of $4.6 billion of unused bank lines of
credit and $140 million in bank borrowings outstanding. As of March 31, 1999,
our operating telephone subsidiaries and financing subsidiaries had shelf
registrations for the issuance of up to $2.8 billion of unsecured debt
securities. The debt securities of those subsidiaries continue to be accorded
high ratings by primary rating agencies. After the announcement of the Bell
Atlantic-GTE merger, the rating agencies placed the ratings of certain of our
subsidiaries under review for potential downgrade.
We also have a $2.0 billion Euro Medium Term Note Program, under which we may
issue notes that are not registered with the Securities and Exchange Commission.
The notes may be issued from time to time by our subsidiary, Bell Atlantic
Global Funding, Inc. (BAGF), and will have the benefit of a support agreement
between BAGF and Bell Atlantic. There have been no notes issued under this
program.
In April 1999, an operating telephone subsidiary New England Telephone and
Telegraph Company issued $200 million of 5.875% notes, due on April 15, 2009.
The proceeds from the issuance will be used to redeem $200 million of 7.375%
notes due on October 15, 2007. We will record a loss of approximately $1 million
related to this redemption in the second quarter of 1999.
- --------------------------------------------------
MARKET RISK
- --------------------------------------------------
We are exposed to various types of market risk in the normal course of our
business, including the impact of interest rate changes, foreign currency
exchange rate fluctuations, changes in equity investment prices and changes in
corporate tax rates. We employ risk management strategies using a variety of
derivatives including interest rate swap agreements, interest rate caps and
floors, foreign currency forwards and options and basis swap agreements. We do
not hold derivatives for trading purposes.
It is our policy to enter into interest rate, foreign currency and other
derivative transactions only to the extent necessary to achieve our desired
objectives in limiting our exposures to the various market risks. Our objectives
include maintaining a mix of fixed and variable rate debt to lower borrowing
costs within reasonable risk parameters, hedging the value of certain
international investments, and protecting against earnings and cash flow
volatility resulting from changes in foreign exchange rates. We do not hedge our
market risk exposure in a manner that would completely eliminate the effect of
changes in interest rates, equity prices and foreign exchange rates on our
earnings. While we do not expect that our liquidity and cash flows will be
materially affected by these risk management strategies, our net income may be
materially affected by certain market risk associated with the exchangeable
notes discussed below.
22
- --------------------------------------------------
Exchangeable Notes
- --------------------------------------------------
In 1998, we issued exchangeable notes as described in Note 6 to the condensed
consolidated financial statements. These financial instruments expose us to
market risk, including foreign exchange rate risk, interest rate risk and equity
price risk, which could affect the fair values of the notes and our future
earnings.
Market risk that could affect the fair values of the exchangeable notes
includes:
. Equity price movements, because the notes are exchangeable into shares that
are traded on the open market and routinely fluctuate in value.
. Foreign exchange rate movements, because the notes are exchangeable into
shares that are denominated in a foreign currency. The fair value of the
TCNZ exchangeable notes is affected by changes in the U.S. dollar/ New
Zealand dollar exchange rate, and the fair value of the CWC exchangeable
notes is affected by changes in the U.S. dollar/ British pound exchange
rate.
. Interest rate movements, because the notes carry fixed interest rates.
Market risk that could affect our future earnings includes:
. Equity price and/or foreign exchange rate movements, because these
movements may result in our TCNZ shares rising to a level greater than 120%
of the share price at the pricing date of the offering. Similar movements
may cause the price of our CWC shares to rise to a level greater than 128%
of the share price at the pricing date of the offering. If either event
should occur, we are required to increase the applicable exchangeable note
liability by the amount of the increase in share price over the exchange
price. This mark-to-market transaction would reduce income by the amount of
the increase in the exchangeable note liability. If the share price
subsequently declines, the liability would be reduced (but not to less than
its amortized carrying value) and income would be increased. At March 31,
1999, the fair values of the underlying TCNZ shares or CWC shares did not
exceed the recorded values of the debt liability and, therefore, no
mark-to-market adjustments were recorded to our financial statements.
Interest rate movements will not impact earnings, because the exchangeable
notes carry a fixed interest rate and there is no requirement to
mark-to-market the notes based on changes in interest rates.
The following sensitivity analysis measures the effect on earnings due to
changes in the underlying share prices of the TCNZ and CWC stock.
. At March 31, 1999, the exchange price for the TCNZ shares (expressed as
American Depositary Receipts) was $44.93 and the exchange price for the CWC
shares (expressed as American Depositary Shares) was $57.61.
. For each $1.00 increase in value of the TCNZ shares or the CWC shares above
the exchange price, our earnings would be reduced by approximately $55
million or $56 million, respectively. A subsequent decrease in value of the
TCNZ shares or the CWC shares would correspondingly increase earnings, but
not to exceed the amount of any previous reduction in earnings. Our
earnings are not affected so long as the TCNZ and CWC share prices remain
at or below their exchange prices.
. Our cash flows would not be affected by mark-to-market activity relating to
the exchangeable notes.
. If we decide to deliver shares in exchange for the notes, the exchangeable
note liability (including any mark-to-market adjustments) will be
eliminated and the investment will be reduced by the book value of the
related number of shares delivered. Upon settlement, the excess of the
liability over the book value of the related shares delivered will be
recorded as a gain. We also have the option to settle these liabilities
with cash upon exchange.
23
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OTHER FACTORS THAT MAY AFFECT FUTURE RESULTS
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Proposed Bell Atlantic - GTE Merger
- --------------------------------------------------
Bell Atlantic and GTE Corporation have announced a proposed merger of equals
under a definitive merger agreement dated as of July 27, 1998. Under the terms
of the agreement, GTE shareholders will receive 1.22 shares of Bell Atlantic
common stock for each share of GTE common stock that they own. Bell Atlantic
shareholders will continue to own their existing shares after the merger.
We expect the merger to qualify as a pooling of interests, which means that for
accounting and financial reporting purposes the companies will be treated as if
they had always been combined. The completion of the merger is subject to a
number of conditions, including certain regulatory approvals, receipt of
opinions that the merger will be tax-free, and the approval of the shareholders
of both Bell Atlantic and GTE. Special meetings to vote on the merger will be
held on May 18, 1999 for GTE shareholders and May 19, 1999 for Bell Atlantic
shareholders.
We are working diligently to complete the merger by the end of 1999. However,
Bell Atlantic and GTE must obtain the approval of a variety of state and federal
regulatory agencies and, accordingly, the merger may close in the first half of
2000.
Future operating revenues, expenses and net income of the combined company may
not follow the same historical trends, or reflect the same dependence on
economic and competitive factors, as presented above in our discussion of our
own historical results of operations and financial condition. You should refer
to Note 9 to the condensed consolidated financial statements for pro forma
financial information for the period ended March 31, 1999.
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Recent Developments
- --------------------------------------------------
REGULATORY
On April 13, 1999, our operating telephone subsidiary in New York made a filing
with the New York State Public Service Commission (NYSPSC) demonstrating that we
have satisfied the 14-point "checklist" required for long distance relief under
the 1996 Act. The filing follows an extensive seven-month third party test of
our operations support systems (OSS) in New York conducted by KPMG Peat Marwick
under the direction of the NYSPSC. In June 1999, the NYSPSC will conduct
technical conferences to complete its review of our OSS and our checklist
compliance. Following completion of the New York review, we will file an
application with the FCC for permission to enter the in-region long distance
market in New York.
COMPETITION
IntraLATA Toll Services
IntraLATA toll calls originate and terminate within the same LATA, but generally
cover a greater distance than a local call. These services are generally
regulated by state regulatory commissions rather than federal authorities. All
of our state regulatory commissions permit other carriers to offer intraLATA
toll services.
Until the implementation of presubscription, intraLATA toll calls were completed
by our operating telephone companies unless the customer dialed a code to access
a competing carrier. Presubscription changes this dialing method and enables
customers to make these toll calls using another carrier without having to dial
an access code.
Our operating telephone company in New York fully completed intraLATA
presubscription implementation by September 1996. By December 1997, our
operating telephone companies in Delaware, Maine, New Hampshire, New Jersey,
Pennsylvania, Rhode Island, Vermont and West Virginia had also implemented
presubscription. We began offering intraLATA presubscription in Massachusetts in
April of 1999 and we expect to offer it in Maryland and Virginia beginning in
May 1999.
Implementation of presubscription for intraLATA toll services has had a material
negative effect on intraLATA toll service revenues in those jurisdictions where,
as noted above, presubscription has been implemented before we are permitted to
offer long distance services. The adverse impact on intraLATA toll services
revenues is being partially offset by an increase in intraLATA access revenues.
24
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OTHER MATTERS
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Year "2000" Update
- ---------------------------------------------------------
We have a comprehensive program to evaluate and address the impact of the Year
2000 date transition on our operations. This program includes steps to:
. inventory and assess for Year 2000 compliance our equipment, software and
systems;
. determine whether to remediate, replace or retire noncompliant items, and
establish a plan to accomplish these steps;
. remediate, replace or retire the items;
. test the items, where required; and
. provide management with reporting and issues management to support a
seamless transition to the Year 2000.
STATE OF READINESS
For our operating telephone subsidiaries, centralized services entities and
general corporate operations, the program focuses on the following project
groups: Network Elements, Applications and Support Systems, and Information
Technology Infrastructure. At this time, we have virtually completed the
inventory, assessment and detailed planning phases for these projects.
Remediation/replacement/retirement and testing activities are well underway. We
plan to fix, replace or retire those items that were not Year 2000 compliant and
that require action to avoid service impact. Our goal for these operations is to
have our network and other mission critical systems Year 2000 compliant
(including testing) by June 30, 1999. We are on schedule to achieve this goal
for substantially all of our network and other mission critical systems.
What follows is a more detailed breakdown of our efforts to date.
. Network Elements
Approximately 350 different types of network elements (such as central
office switches) appear in over one hundred thousand instances. When
combined in various ways and using network application systems, these
elements are the building blocks of customer services and networked
information transmission of all kinds. We originally assessed approximately
70% of these element types, representing over 90% of all deployed network
elements, as Year 2000 compliant. Late in 1998, through additional testing
and verification, we determined that certain network elements, originally
represented as having no Year 2000-related service impact, were likely to
cause service issues unless remediated. As a result, we had an increase in
the overall number of network elements requiring repair. Notwithstanding
the additional work effort, as of March 31, 1999, we have repaired or
replaced approximately 60% of the deployed network elements requiring
remediation, and certification testing/evaluation is well underway. We also
have made substantial progress on the remaining network elements. Although
we are generally on track to achieve our June 30, 1999 goal for network
elements, it is possible that the timeframe for compliance of a small
number of network elements may extend into July or August, without any
impact on customer service or our operations.
. Application and Support Systems
Approximately 1,200 application and systems support (i) the administration
and maintenance of our network and customer service functions (network
information systems); (ii) customer care and billing functions; and (iii)
human resources, finance and general corporate functions. We originally
assessed approximately 48% of these application systems as either compliant
or to be retired. As of March 31, 1999, we have successfully completed
certification testing/evaluation of approximately 73% of all application
systems. We also have made substantial progress on the remaining
application systems. Although we are generally on track to achieve our June
30, 1999 goal for applications and support systems, it is possible that the
timeframe for compliance of a small number of applications and support
systems may extend into July or August, without any impact on customer
service or our operations.
. Information Technology Infrastructure
Approximately 40 mainframe, 1,000 mid-range, and 90,000 personal computers,
related network components, and software products comprise our information
technology (IT) infrastructure. Of the approximately 1,350 unique types of
elements in the inventory for the IT infrastructure, we originally assessed
approximately 73% as compliant or to be retired. As of March 31, 1999, we
have successfully completed certification testing/evaluation of
approximately 95% of all mission critical element types. We have made
substantial progress on the remaining items and we are on track to achieve
our June 30, 1999 goal.
25
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Year "2000" Update - continued
- --------------------------------------------------------------
For our other controlled or majority-owned subsidiaries, including Bell Atlantic
Mobile and our directory companies, the inventory, assessment and planning
efforts are substantially complete, and remediation/replacement/retirement and
testing activities are in progress. Bell Atlantic Mobile, our directory
companies and, in general, all of the other controlled or majority-owned
subsidiaries are on track to achieve our June 30, 1999 goal for substantially
all of their mission critical systems. Our Iusacell subsidiary has experienced
some delays in implementation of its Year 2000 project plan. It is currently
anticipated that required modification, replacement and retirement of
substantially all of its mission critical systems will be completed by September
30, 1999, with testing continuing throughout 1999.
Our Year 2000 program also includes a project to review and remediate affected
systems (including those with embedded technology) within our buildings and
other facilities, a project to assure Year 2000 compliance across all of our
internal business processes, and other specific projects directed towards
insuring we meet our Year 2000 objectives.
THIRD PARTY ISSUES
. Vendors
In general, our product vendors have made available either Year
2000-compliant versions of their offerings or new compliant products as
replacements of discontinued offerings. In some cases, the compliance
"status" of the product in question is based on vendor-provided
information, which remains subject to our testing and verification
activities. In several instances, vendors have not met original delivery
schedules, resulting in delayed testing and deployment. At this time, we do
not anticipate that such delays will have a material impact on our ability
to achieve Year 2000 compliance within our desired timeframes.
We are continuing Year 2000-related discussions with utilities and similar
services providers. In general, information requests to such services
providers have yielded less meaningful information than inquiries to our
product vendors, and we do not yet have sufficient information to determine
whether key utilities and similar service providers will successfully
complete the Year 2000 transition. However, we are now beginning to engage
in more productive discussions with large utilities servicing our
facilities and we are hopeful that these discussions will provide us
additional assurance of Year 2000 compliance for those entities. At the
present time, we remain unable to determine the Year 2000 readiness of most
key utilities and similar service providers or the likelihood that those
providers will successfully complete the Year 2000 transition. We intend to
monitor critical service provider activities, as appropriate, through the
completion of their respective remediation projects.
. Customers
Our customers remain keenly interested in the progress of our Year 2000
efforts, and we anticipate increased demand for information, including
detailed testing data and company-specific responses. We are providing
limited warranties of Year 2000 compliance for certain new
telecommunications services and other offerings, but we do not expect any
resulting warranty costs to be material. We are also analyzing and
addressing Year 2000 issues in customer premise equipment (CPE), including
CPE that we have sold or maintained. In general, the customer is
responsible for CPE. However, customers could attribute a Year 2000
malfunction of their CPE, whether or not sold or maintained by us, to a
failure of our network service. We also have a separate effort to identify
and address Year 2000 issues for CPE and other equipment that we maintain
for Public Safety Answering Points (PSAPs) and is used in connection with
the provision of E-911/911 and related services. We are presently repairing
and replacing E-911/911-related CPE, as appropriate, that we maintain for
various PSAPs.
. Interconnecting Carriers
Our network operations interconnect with domestic and international
networks of other carriers. If one of these interconnecting carriers should
fail or suffer adverse impact from a Year 2000 problem, our customers could
experience impairment of service.
26
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Year "2000" Update - continued
- ---------------------------------------------------------------
COSTS
From the inception of our Year 2000 project through March 31, 1999, and based on
the cost tracking methods we have historically applied to this project, we have
incurred total pre-tax expenses of approximately $138 million, and we have made
capital expenditures of approximately $89 million. For 1999, we expect to incur
total pre-tax expenses for our Year 2000 project of approximately $75 million to
$150 million (approximately $16 million of which was incurred through March 31,
1999) and total capital expenditures of $75 million to $125 million
(approximately $9 million of which was incurred through March 31, 1999). These
cost estimates have been included in our earnings targets.
We have investments in various joint ventures and other interests. At this time,
we do not anticipate that the impact of any Year 2000 remediation costs that
they incur will be material to our results of operations.
RISKS
The failure to correct a material Year 2000 problem could cause an interruption
or failure of certain of our normal business functions or operations, which
could have a material adverse effect on our results of operations, liquidity or
financial condition; however, we consider such a likelihood remote. Due to the
uncertainty inherent in other Year 2000 issues that are ultimately beyond our
control, including, for example, the final Year 2000 readiness of our suppliers,
customers, interconnecting carriers, and joint venture and investment interests,
we are unable to determine at this time the likelihood of a material impact on
our results of operations, liquidity or financial condition due to such Year
2000 issues. However, we are taking appropriate prudent measures to mitigate
that risk. We anticipate that, in the event of any material interruptions or
failures of our service resulting from actual or perceived Year 2000 problems
within or beyond our control, we could be subject to third party claims.
CONTINGENCY PLANS
As a public telecommunications carrier, we have had considerable experience
successfully dealing with natural disasters and other events requiring
contingency planning and execution. As part of our efforts to develop
appropriate Year 2000 contingency plans, we are reviewing our existing Emergency
Preparedness and Disaster Recovery plans for any necessary modifications.
We have developed, where appropriate, contingency plans for addressing delays in
remediation activities. For example, delay in the installation of a new Year
2000 compliant system could require remediation of the existing system. We are
also developing a corporate Year 2000 contingency plan to ensure that core
business functions and key support processes are in place for uninterrupted
processing and service in the event of external (e.g. power, public
transportation, water), internal or supply chain failures (i.e. critical
dependencies on another entity for information, data or services). We have
prepared an initial draft of our corporate Year 2000 contingency plan and we are
continuing to refine and enhance that plan.
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Recent Accounting Pronouncement
- ---------------------------------------------------------------
Derivatives and Hedging Activities
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities." This statement
requires that all derivatives be measured at fair value and recognized as either
assets or liabilities on our balance sheet. Changes in the fair values of
derivative instruments will be recognized in either earnings or comprehensive
income, depending on the designated use and effectiveness of the instruments.
Bell Atlantic must adopt SFAS No. 133 no later than January 1, 2000. We are
currently evaluating the provisions of SFAS No. 133 and have not yet determined
what the impact of adopting this statement will be on our future results of
operations or financial condition.
27
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
- ----------------------------------------------------------------------
In this Management's Discussion and Analysis, and elsewhere in this Quarterly
Report, we have made forward-looking statements. These statements are based on
our estimates and assumptions and are subject to risks and uncertainties.
Forward-looking statements include the information concerning our possible or
assumed future results of operations. Forward-looking statements also include
those preceded or followed by the words "anticipates," "believes," "estimates,"
"hopes" or similar expressions. For those statements, we claim the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
The following important factors, along with those discussed elsewhere in this
Quarterly Report, could affect future results and could cause those results to
differ materially from those expressed in the forward-looking statements:
. materially adverse changes in economic conditions in the markets served by
us or by companies in which we have substantial investments;
. material changes in available technology;
. the final outcome of federal, state, and local regulatory initiatives and
proceedings, including arbitration proceedings, and judicial review of
those initiatives and proceedings, pertaining to, among other matters, the
terms of interconnection, access charges, universal service, and unbundled
network element and resale rates;
. the extent, timing, success, and overall effects of competition from others
in the local telephone and toll service markets;
. the timing and profitability of our entry into the in-region long distance
market;
. the success and expense of our remediation efforts and those of our
suppliers, customers, joint ventures, noncontrolled investments, and
interconnecting carriers in achieving Year 2000 compliance; and
. the timing of, and regulatory or other conditions associated with, the
completion of the merger with GTE and our ability to combine operations and
obtain revenue enhancements and cost savings following the merger.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ------------------------------------------------------------------------
Information relating to market risk is included in Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, in the
Financial Condition section under the caption "Market Risk."
28
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Part II - Other Information
- ------------------------------------------------------------
Item 1. Legal Proceedings
- ------------------------------------------------------------
There were no proceedings reportable under this item.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------------------------
(a) Exhibits:
Exhibit
Number
------
12 Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended March 31, 1999:
A Current Report on Form 8-K, dated January 3, 1999, was filed regarding
discussions with AirTouch Communications relating to a possible business
combination.
A Current Report on Form 8-K, dated January 15, 1999, was filed regarding
(a) the end of discussions with AirTouch Communications relating to a
possible business combination; and (b) selected fourth quarter and 1998
operating and financial results for Bell Atlantic Global Wireless.
A Current Report on Form 8-K, dated January 27, 1999, was filed regarding
our 1998 financial results.
29
Signatures
- --------------------------------------------------
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.
BELL ATLANTIC CORPORATION
Date: May 12, 1999 By /s/ Doreen A. Toben
------------------------
Doreen A. Toben
Vice President - Controller
(Principal Accounting Officer)
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 6, 1999.
30
Exhibit Index
-------------
Exhibit
Number
- ------
12 Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
31